Gas sales, China deal boost profit at Russia’s Novatek

By Olesya Astakhova

MOSCOW, April 27 (Reuters) -- Russia's second-largest natural gas producer Novatek overcame Western sanctions to deliver stronger net profit in the first quarter by selling a stake in an LNG project to a Chinese fund and improving domestic gas sales.

Novatek, which is under a Western sanctions over Moscow's role in the Ukraine crisis, has been struggling to raise funds for its $27-billion Yamal LNG project and turned to China for investment partnerships and loans.

The company said on Wednesday it had completed the sale of 9.9% in Yamal LNG, which is due to start production of LNG next year, to China's Silk Road Fund in March.

Novatek said that including the deal, first-quarter net profit reached 115.9 billion roubles ($1.8 billion). Excluding the Yamal LNG stake sale, first-quarter normalized net income jumped by 87.4% to 58.2 billion roubles ($893 million).

Revenue was up 22.5% to 139.4 billion roubles, largely due to an increase in sales of liquids, mainly crude oil and gas condensate.

The company has increased its share of the Russian gas market as, unlike its competitor state-owned gas giant Gazprom, it is able to cut its prices.

Novatek, in which France's Total has an 18.2% stake, said its earnings before interest, tax, depreciation and amortization (EBITDA), including its share in joint ventures, increased by 13% to 62.1 billion roubles.

The company's other key shareholders are Gennady Timchenko and CEO Leonid Mikhelson.

Novatek's shares were 0.3% higher at 1200 GMT, outperforming the Moscow broader stock market.

($1 = 65.1398 roubles)

(Writing by Polina Devitt and Vladimr Soldatkin; Editing by Louise Heavens and Alexander Smith)

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