A Review of the Nigerian Energy Industry

BP, Gazprom profits dip

Tullow Oil Plc review30 April 2013, London – UK’s BP witnessed a drop in profits for the first quarter of 2013 following a decline in oil and gas production resulting from divestments.

The supermajor posted a total profit of $16.9 billion for the first three months of 2013, up almost three-fold from the $5.8 billion reported for the same period last year, after receiving $12.5 billion from Russia’s Rosneft for its stake in TNK-BP.

Russian giant, Gazprom, also reported, Tuesday, a fall in profits for 2012 despite a rise in revenue over the previous year.

Gazprom posted a profit of 1.2 trillion rubles ($39 million) for the year, down from 2011’s profit of just over 1.3 trillion rubles.

For BP, however, the underlying replacement cost profit (adjusted for non-operating items and fair value accounting effects) was $4.2 billion, down 10% from $4.7 billion for the same period last year.

Operating cash flow was up 18% on last year to $4 billion and the TNK-BP sale resulted in net debt falling to $17.7 billion, equivalent to a gearing level of 11.9%.

“These strong first quarter results demonstrate the progress BP is making in delivering the performance milestones that support our 10-point plan and underpin our commitment to material operating cash flow growth by 2014,” BP chief executive officer, Bob Dudley, said in a statement on Tuesday.

“The early completion of the sale of our interest in TNK-BP has also allowed us to begin a share buy-back programme which we expect to return up to $8 billion to our shareholders and reflects the reduction in BP’s asset base following our divestment programme over the past three years,” he added.

Reported oil and gas production, excluding the recent TNK-BP and Rosneft transactions, was 5% lower than the March 2012 quarter at 2.33 million barrels of oil equivalent per day.

While BP mainly attributed this lower output to divestments, it said reported production in the second quarter was expected to be even lower “as a result of planned seasonal turnaround activity concentrated on higher-margin assets in the Gulf of Mexico and the North Sea, together with the ongoing impact of divestments”.

As for Gazprom, its fall in profits came despite a rise in sales revenue, from 4.6 trillion rubles in 2011, to nearly 4.8 trillion rubles last year.

Helping lift that figure was a 2% increase in revenue from net sales of gas to Europe and other countries by nearly 30.4 billion rubles to almost 1.5 trillion rubles on the back of an increase in average realised prices by 12%.

This helped offset 19%, or 15.6 billion cubic metre, fall in the volume of gas sold to Europe and other countries.

Also lifting sales revenue was a 3% increase in revenue from domestic sales to nearly 760.7 billion rubles, helped by an increase in the average domestic price for gas by 9%, again helping offset a 6%, or 15.8 Bcm, fall in domestic sales volumes.

A 24% rise in net sales of refined products, to 1.2 trillion rubles, and a 17% jump in the net sales of crude and gas condensate to 275.3 billion rubles, also helped in lifting revenue.

Eating away at the company’s increased revenues however was an 18% jump in operating expenses to nearly 3.5 trillion rubles, compared to just over 2.9 trillion rubles in 2011.

Gazprom attributed the rise in operating expenses mainly to higher taxes, materials expenses, staff costs, depreciation and the transit of gas, oil and other refined products.

In this article

Join the Conversation