MOSCOW, Oct 24 – Russia’s biggest non-state gas producer Novatek beat forecasts with a 22 percent rise in third-quarter net profit as it benefited from rising oil and gas prices and the start of LNG production.
Novatek, France’s Total and Chinese partners jointly launched production of liquefied natural gas (LNG) in the Yamal Peninsula in the Arctic circle last December.
The company said on Wednesday that LNG output helped increase its third quarter net profit to 45.9 billion roubles ($700 million), topping a Reuters poll forecast of 43.7 billion roubles.
In the first nine months of 2018, Novatek shipped 5 million tonnes of LNG and 473,000 tonnes of stable gas condensate from the port of Sabetta in Yamal, for delivery under both short-term and long-term contracts.
Russia wants to become a global leader in LNG production, more than doubling its worldwide market share to 20 percent in the next decade and targeting annual exports of 80 million-115 million tonnes.
U.S. and European sanctions imposed on Russia over Moscow’s actions in Ukraine have made exports of technology to Russia and the funding of some projects challenging. However, Novatek – which is controlled by its CEO Leonid Mikhelson and businessman Gennady Timchenko, a friend of Russian President Vladimir Putin – said it was able to raise necessary funding for the Yamal project.
“The group together with its foreign partners currently raises necessary financing for our joint ventures from non-U.S. debt markets and lenders,” the company said in its results statement.
Yamal LNG shareholders opened additional credit line facilities denominated in euros in the third quarter of 2018 to finance construction of the fourth train of the plant, it said.
Novatek’s total group sales jumped 68 percent in July-September from a year earlier to 219.37 billion roubles, while normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of subsidiaries increased by 57 percent to 70.7 billion roubles, exceeding the average forecast of 69.6 billion roubles. ($1 = 65.5940 roubles) (Reporting by Vladimir Soldatkin Editing by David Goodman and Susan Fenton)