High gas prices push Russian Gazprom's H1 profit to record high

Russia's Gazprom posted a record net profit of Rb2.5 trillion ($41.3 billion) in the first half of this year, the company said late Aug. 30, as European gas prices remained at sustained highs throughout the period.

Gazprom's gas exports to Europe have slumped in 2022, but record high gas prices meant the company was still able to post record revenues and net profit for the first half.

The Platts-assessed Dutch TTF month-ahead price averaged Eur100.25/MWh in the first half of 2022 compared with Eur21.61/MWh in the same period last year, according to S&P Global Commodity Insights data.

High prices meant Gazprom was able to boost revenues and profits despite first-half exports to non-CIS countries totaling just 68.9 Bcm, down 31% from the same 2021 period.

"Despite the sanctions pressure and an unfavorable external environment, Gazprom demonstrated record-high revenue and net profit under IFRS in the first half of 2022," Famil Sadygov, deputy chairman of Gazprom's management committee, said.

Dividend payout

Sadygov said Gazprom would also pay an interim dividend for the period of Rb51.03 per share.

"In view of the robust financial results and the considerable liquidity cushion on the balance sheet, the board of directors recommended that the shareholders meeting vote to pay out Rb51.03 per share," he said.

Gazprom, which did not pay a dividend for full year 2021, said an extraordinary shareholders meeting would take place on Sept. 30.

Since Russia's invasion of Ukraine in February, Gazprom has been less forthcoming about its financial results than before, not publishing a first-quarter report.

In recent years, Gazprom published regular quarterly reports that included financial results as well as detailed information on gas sales on a country-by-country basis.

It also regularly held calls with analysts on the company's performance and outlook.

According to the company's financial calendar, it has not scheduled results reports or calls with analysts for the remainder of 2022.

2022 revenues

In a speech to industry workers Aug. 31, Gazprom CEO Alexei Miller said the first-half results were "very, very, very good" with a record dividend to be paid.

"And, of course, such a financial result allows us to say that we are reliably provided with cash flow for the implementation of our strategic investment projects," Miller said.

He added that despite the decrease in the volume of gas supplies to foreign markets, "our calculations clearly show that our revenue for 2022 will be significantly higher than in 2021."

Miller added that the high prices in Europe were a result of the EU's "erroneous" decisions on long-term contracts and decarbonization.

"The price of gas regularly exceeds the level of $3,000/1,000 cu m. According to a conservative estimate, while maintaining the trends that are currently on the market, the price at the peak of the autumn-winter maximum can exceed $4,000/1,000 cu m," he said.

Miller said global gas demand was down in the first eight months of 2022 by 40 Bcm year on year. Most of the decline -- almost 30 Bcm -- was in the EU-27, he said.

However, he said Russian gas supplies to China via the Power of Siberia pipeline were up 60% year on year in the first eight months of 2022.

Miller also said Gazprom produced 288.1 Bcm in the first eight months of 2022 and supplied 82.2 Bcm to non-CIS countries in the period.

That implies August gas production of 25.7 Bcm -- or an average of 829 million cu m/d. That is up on the July average of just 774 million cu m/d, but still well below the 2022 peak in January of 1.53 Bcm/d.

The volume for exports to non-CIS countries implies an August average supply of 223 million cu m/d, up from 206 million cu m/d in July.