COVID-19 effects push Novatek into red
- Business & Finance
Russia’s largest private natural gas producer and LNG player Novatek slipped into red under the COVID-19 impacts.
Novatek reported a net loss of ₽30.7 billion ($416.8 million) in the first quarter of the year. This compares to a profit of ₽381.8 billion ($5.2 billion) reported in the first quarter of 2019.
The company noted that the profit was impacted by the effects of the COVID-19 spread on the global markets. This negative economic impact has lowered demand for crude oil, natural gas and oil products. Combined with the increase in the supply of crude oil due to the cancellation of the OPEC+ production agreement in the first quarter of 2020, this resulted in a decline in global hydrocarbon commodity prices.
Additionally, Russian rouble depreciated relative to the US dollar and Euro. This all translated to lower hydrocarbon prices for Novatek. The company also recognised substantial foreign exchange effects.
Novatek’s revenue for the quarter under review slipped by 21.2 per cent from ₽231.3 billion to ₽182.6 billion.
The decrease in revenues was largely due to a decline in world prices for hydrocarbons.
Revenue also decreased due to a drop in LNG sales volumes on international markets. This was due to an increase in the share of Yamal LNG long-term deal sales and a decrease in spot volumes.
Natural gas sales volumes drop
Novatek reported a 6.8 per cent drop in natural gas sales volumes.
Sales totaled 20.7 billion cubic meters, Novatek said in its report. The decrease is attributed to the increase in Yamal LNG long-term contract offtake.
Natural gas volumes sold on the domestic market decreased by 0.5 bcm, or 2.9 per cent. This was a result of the lower demand from end-customers due to warmer winter weather conditions.