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NOVATEK's 2020 profit slumps 92% as the coronavirus pandemic hit energy demand worldwide

Oil & gas industry is on a long road to recovery from pandemic.

NOVATEK's 2020 profit slumps 92% as the coronavirus pandemic hit energy demand worldwide

Moscow, February 18 - Neftegaz.RU. Russian independent NOVATEK said it made a net profit of RUB 67.83 billion ($919 million) compared with RUB 865.48 billion ($11.7 billion) in 2019.
Thus, NOVATEK's net profit decreased by almost 92%, following a tumultuous 12 months in which commodity prices collapsed amid the coronavirus pandemic.
But it should be noted that the company has received such a significant profit in 2019 from the sale of its stake in the Arctic LNG-2 project.

The Russian energy company stated:
  • The spread of the COVID-19 in 2020 and shutdowns have caused financial & economic stress to the global markets
  • This negative economic impact lowered demand for oil & gas, which combined with the increase in the supply of oil due to the cancellation of the OPEC+ agreement in the Q1 2020, resulted in a decline in global hydrocarbon commodity prices
  • Despite the economic instability, NOVATEK achieved strong operating results and implemented its main investment projects
In 2020, the company´s total revenues and Normalized EBITDA amounted to RUB 711.8 billion ($9.65 billion).

NOVATEK´s cash used for capital expenditures aggregated RUB 204.6 billion ($2.77 bilion).
A significant portion of its capital expenditures was attributable to the ongoing development of the LNG projects:
  • Arctic LNG 2
  • the LNG construction center located in the Murmansk region
  • the Obskiy LNG project
The company also invested capital in the development:
  • of the fields within the North-Russkiy cluster,
  • Beregovoye, and Yurkharovskoye fields
  • of crude oil deposits of the East-Tarkosalinskoye and Yarudeyskoye fields
Over the past month, a lot of oil & gas companies have released annual reports showing huge damage from 2020.
Currently, oil prices continue to steadily inch upward to their highest in 12 months, reflecting the optimistic tone of several reports.
After a year of record losses, most companies expect 2021 to improve as the pandemic eases.

To read the full story in Russian.

Author: Elena Alifirova

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