Russian gas giant Novatek's profit surges

Higher oil and gas prices helped lift earnings, the company said

(FILES) This file photo taken on April 16, 2015 shows natural gas reservoirs under construction at the port of Sabetta in the Kara Sea shore line on the Yamal Peninsula in the Arctic circle, some 2450 km of Moscow.
Russia on December 05, 2017 launched the first terminal for liquefied natural gas project, Yamal LNG, in the Russian Arctic, Russian gas producer Novatek said. / AFP PHOTO / KIRILL KUDRYAVTSEV
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Russian gas producer Novatek said on Wednesday its 2018 net profit rose 4.7 per cent to 163.7 billion roubles (Dh9.18bn) thanks to the start of liquefied natural gas (LNG) production.

Novatek, controlled by CEO Leonid Mikhelson and businessman Gennady Timchenko, a friend of Russian President Vladimir Putin, launched Yamal LNG in the Arctic in December 2017 as part of Russia's plan to raise its share on global energy markets.

More navigable waters are a boost for Russian President Vladimir Putin’s effort to expand his nation’s reach in the gas market and for energy companies such as Total and Novatek, which are leading Arctic developments, according to Bloomberg. They also help reduce shipping costs for LNG, benefiting buyers and traders of the fuel from PetroChina to Gunvor Group.

Moscow-traded shares in Novatek, Russia's biggest gas producer which is not owned by the state, rose 1.3 per cent, Reuters reported.

Other stakeholders in the project with annual capacity of 16.5 million tonnes per year are Novatek's shareholder and French energy major Total, as well as China's CNPC and the Silk Road Fund.

Excluding the effect of foreign exchange differences, as well as the one-time effect from the disposal of interests in joint ventures, profit jumped 49 per cent to 232.9bn roubles.

Higher oil and gas prices helped lift earnings, the company said.

Last-year revenues rose by 42.6 per cent to 831.8bn roubles, while natural gas production increased 8.5 per cent to 68.8bn cubic metres, oil and gas condensate output edged up by 0.3 per cent to 11.8 million tonnes.