Moscow — Russia’s Gazprom on Thursday reported an 89% fall in 2020 net profit to 135.3 billion roubles ($1.8 billion), hurt by lower prices and sales and a huge rise in costs including a foreign exchange-related loss, but it expects a recovery in 2021.
Gazprom, which provides more than a third of the European Union’s gas, said the pandemic had hit gas demand and lowered average gas prices in Europe by 32% in U.S. dollar terms.
Speaking at an online investors day, Elena Burmistrova, Gazprom’s head of exports, said the gas glut in the European gas market in 2020 was unlikely to persist into 2021, a reversal from a previous assessment.
A warm winter and high levels of reserves in storage contributed to oversupply in early 2020, she explained, but a cold winter and LNG outflows to Asia were contributing to the opposite situation in 2021.
“The need to replenish reserves will support demand and prices in the coming summer,” she said. “In addition, a recovery of the European economy will support demand for energy in general.
“Thus, the critical oversupply situation will not be repeated this year,” she said.
Gazprom expected the average export price for gas to be $200-$206 per 1,000 cubic metres this year.
The company has reiterated its forecast for an increase of gas exports to Europe to 183 billion cubic metres (bcm) this year from 179.3 bcm in 2020.
It also expects its core profit to rise 50% in 2021.
Gazprom’s sales fell 18% to 6.3 trillion roubles last year from 7.7 trillion in 2019.
Financial costs soared to 1.37 trillion roubles from 355 billion in 2019, including a forex loss of 604.8 billion versus a forex profit a year earlier.
In the fourth quarter, the financials rebounded with a net profit of 354 billion roubles which offset nine-month losses, while its fourth-quarter free cash flow amounted to 200 billion roubles.
$1 = 74.3700 roubles
(Reporting by Vladimir Soldatkin and Oksana Kobzeva; writing by Vladimir Soldatkin and Alexander Marrow; editing by Hugh Lawson, Jason Neely, David Goodman and Sonya Hepinstall)