Russia’s state-owned gas producer Gazprom is emerging as one of the big winners from the global energy crisis with a spike in profits paving the way for a record dividend payout next year. 2021, with even more impressive results forecast.
The company posted record profits for the first nine months of the year on the back of soaring gas prices, which is expected to boost profits further in the final quarter of the year.
The company’s vice president, Famil Sadygov, said earnings of 1.55tn Rbs ($20 billion) in the nine months to the end of September “was higher than any year in the company’s history”.
“Given the current dynamics, we expect even more impressive results in the fourth quarter,” he said.
According to Alexander Ivannikov, head of the economic department of Gazprom, the company’s gas export prices have set a historic record, and in the fourth quarter they will set a record in dollars. “High gas prices are not a temporary phenomenon,” he said.
With a record-high free cash flow of $9 billion in the first nine months of the year and a payout ratio of 50%, Gazprom said it will pay an annual dividend of Rs 29.71 per share, up from Rs 12.55 last year.
That would give a huge boost to the Kremlin, which directly holds a 38% stake in the company and an additional 12% is owned by two other state-owned companies.
Gazprom, the Russian gas export monopoly, has benefited from soaring gas prices in Europe, its main export market. Despite fulfilling its contractual obligations, the company posted no additional sales in the spot market, helping to maintain high prices due to strong demand from consumers in Asia.
According to Gazprom, gas prices have increased for six consecutive quarters, and the third quarter price almost tripled year-on-year to $304 per 1,000 cubic meters.
Revenue from general gas sales for the first nine months of the year increased 77% year-on-year to Rbs 3.5tn. Sales to Europe and Turkey increased 117% to Rbs 2.5tn. Prices have risen since then, retaining the outlook for further earnings growth.
“The market environment tells us that in any case, based on our expectations and calculations, next year’s weighted average price will not be any lower. . . this year,” said deputy director of Gazprom’s export department, Andrey Zotov.
The relatively low availability of gas at European underground storages, including Gazprom’s in Germany and Austria, has also supported high prices.
Gazprom said it did not find holding gas in storage in Europe commercially attractive due to storage prices and had stopped boosting volumes until earlier this month.
Gazprom shares were up 4.76% at Rbs 341.51 on Monday.
A report released Monday by human rights group Global Witness found that the world’s largest gas companies, most of which produce oil, reported profits of $65 billion in the third quarter of 2021, an increase of 24 % over the same period in 2019.
“These attractive returns by already extremely wealthy gas companies show that, although not by us,” said Jonathan Gant, senior gas campaigner at Global Witness. generated, but it is citizens who are being forced to pay the price for the energy crisis.
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