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OAO Gazprom Neft

02/18/2021 | Press release | Distributed by Public on 02/18/2021 00:03

Gazprom Neft’s net profit reaches ₽117.7 billion in 2020

Gazprom Neft's net profit reaches ₽117.7 billion in 2020

18 February 2021
Press-releaseEfficiency
  • The Company recorded consistent net-profit growth in Q2-Q4 2020, the challenging market environment notwithstanding
  • Adjusted EBITDA* was ₽485.2 billion in 2020
  • Net profit has been positive since Q2, reaching ₽81.5 billion in Q4 2020, a three-fold increase on Q3
  • The Company has maintained its conservative approach to liquidity management, maintaining an optimum debt burden

Gazprom Neft (the 'Company') today has published its IFRS consolidated financial statements for the 12 months and fourth quarter (Q4) ended 31 December 2020 (FY 2020).

FY 2020 revenues totalled ₽2 trillion, and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) ₽485 billion. Net profit attributable to Gazprom Neft PJSC shareholders was confirmed at ₽117.7 billion. The Company's FY 2020 financial performance reflects the impact of the COVID-19 pandemic, as well as lower oil prices and lower demand for oil and petroleum products on the domestic and international markets.

Hydrocarbon production, including Gazprom Neft's share in joint ventures, reached 96.1 million tonnes of oil equivalent (mtoe) in 2020, maintaining last year's volumes. Oil production across the Group was limited by the OPEC+ agreement. Gas production was up 5.5% Y-o-Y - this growth being achieved through the commissioning of new wells at Arcticgas fields and at the Novoportovskoye field, additional production capacity increasing associated petroleum gas (APG) utilisation at fields in the Tomsk and Orenburg Oblasts, and a new gas treatment complex being commissioned at the Vostochno-Messoyakhskoye field in the Yamalo-Nenets Autonomous Okrug.

Gazprom Neft continued the proactive development of its resource base throughout 2020 - a significant increase in the Group's reserves being achieved through oil-rim and Neocomian-Jurassicgas and gas-condensate deposits at Gazprom PJSC fields (being developed under long-term risk-operatorship agreements), which are now being included in the Company's resource base.

Gazprom Neft acquired subsoil usage rights to 18 new license blocks in the Yamalo-Nenets and Khanty-Mansiysk Autonomous Okrugs. A joint venture was established with LUKOIL and Tatneft to develop hard-to-recover reserves, and to develop license blocks in the Orenburg Oblast. A joint venture was established with Zarubezhneft to develop new approaches to producing hard-to-recover oil, and to develop assets in the Khanty-Mansi Autonomous Okrug-Yugra. In addition to this, a joint venture was established with Shell in December 2020 to allow both companies to join forces and share skills and competencies in developing a major prospecting cluster in the north-east of the Gydan Peninsula.

Refining volumes at Gazprom Neft's own and joint-venture refining assets reached 40.4 million tonnes in 2020. The Company continued the implementation of its refinery modernisationprogramme, directed at improving refining depth and efficiency, and at further reducing environmental impacts. Gazprom Neft's refinery modernisation projects ensured a 5.1% increase in production of high-octane gasoline, and a 5.7% increase in diesel fuels.

A unique 'EURO+' oil refining complex was commissioned at the Moscow Refinery - delivering full-cycle production in Russia's refining industry for the first time. A deep refining complex was commissioned at the NIS oil refinery in Pančevo, involving delayed coking technology - allowing the refinery to increase conversion rate to a record 99.2%, as well as increasing its production of motor fuels and commencing production of petroleum coke (a product in considerable demand and previously only available for purchase abroad) in Serbia for the first time. As part of its involvement in the national project to establish the country's first advanced catalyst facility, Gazprom Neft opened an industry centre for developing catalyst technologies in Omsk: this complex will facilitate research into and fine-tuning of catalyst production technologies for Russia's oil refining industry.

Sales of petroleum products through premium channels exceeded 23 million tonnes in 2020. Sales trends in aviation and marine fuels were significantly impacted by restrictions arising from the COVID-19 pandemic, as well as the drop in demand in Russia and worldwide. But even under these unprecedented conditions the company continued to succeed in expanding its market share in respective sectors, as well as practically recovering sales of motor fuels relative to 2019. Gazprom Neft continued developing its own retail network, and expanding its product range. The Company increased sales of bitumen materials by 16.7%, and began using sea-going bitumen tankers to export high-tech bitumens to European customers for the first time. The Company launched its proprietary low-sulphur (under 0.5%) marine fuel (produced at the Omsk Refinery) on the bunkering market in 2020. Russia's first ever LNG-bunkering vessel - the Dmitry Mendeleev - was put to sea at the end of 2020.

Gazprom Neft has joined as a participant the United Nations Global Compact (the world's largest corporate sustainability initiative) in 2020 (part of the Company's continuous and effective implementation of its sustainable development policy), and was also awarded the highest rating of all Russia's oil companies under this year's CDP (formerly the Carbon Disclosure Project) ratings - the world's most authoritative corporate climate responsibility survey.

'Gazprom Neft has more than risen to the unprecedented challenges of 2020. This year's results have fully endorsed our reliance on a flexible management model. Thanks to this, important decisions have been made on time, and Gazprom Neft has been able to adapt quickly to the rapidly changing external environment. We have ensured a high degree of protection against COVID-19 for our employees, partners and clients, and have maintained continuity in all operational and productive processes, as well as ensuring the company's financial sustainability.
Not only have we posted a net profit for this challenging year - we have also maintained production volumes at 2019 levels: the result of effective asset management and higher gas production. Market volatility notwithstanding, Gazprom Neft has continued its practice of paying interim dividends, increasing the dividend allocation to 50% of IFRS net profit. Our 2020 performance confirms that not only did the Company respond well to the crisis - we also became more efficient. This is down to all of Gazprom Neft's employees - a team of like-minded people, bound together by the same values and goals. We will continue implementing the Company's long-term strategy in 2021 - a key area of focus here being sustainable development, and will be bringing still more efforts to bear in implementing projects in ESG.'
Alexander DyukovChairman of the Management Board, Gazprom Neft

Financial highlights

4Q

3Q

∆, %

12 months

∆, %

2020

2020

2020

2019

550,046

536,741

2.5

Revenue (₽ millions)

1,999,620

2,485,308

(19.5)

138,923

128,521

8.1

EBITDA (₽ millions)

415,375

711,846

(41.6)

155,971

147,252

5.9

Adjusted EBITDA (₽ millions)

485,203

795,129

(39.0)

11.55

11.52

0.3

US$/boe

9.48

17.31

(45.2)

81,506

27,961

191.5

Profit attributable to Gazprom Neft PJSC shareholders (₽ millions)

117,699

400,201

(70.6)

207,788

136,902

51.8

Cash flow from operations (₽ millions)

517,057

609,076

(15.1)

85,109

91,218

(6.7)

Free cash flow (₽ millions)**

117,416

173,834

(32.5)

1.32

1.50

(12.1)

Net debt / EBITDA

1.32

0.70

88.6

Operational highlights

4Q

3Q

∆, %

12 months

∆, %

2020

2020

2020

2019

177.16

173.73

2.0

Hydrocarbon production including Gazprom Neft's share in joint ventures (mboe)

709.74

709.67

-

23.97

23.51

2.0

Hydrocarbon production including Gazprom Neft's share in joint ventures (mtoe)

96.06

96.10

-

10.22

10.67

(4.2)

Refining throughput at the company's own and joint-venture refineries (million tonnes)

40.39

41.47

(2.6)

2.12

2.39

(11.3)

Gasoline production at the company's own and joint-venture refineries (million tonnes)

8.43

8.02

5.1

3.06

3.34

(8.4)

Diesel production at the company's own and joint-venture refineries (million tonnes)

12.55

11.87

5.7

5.96

6.22

(4.2)

Sales volumes through premium channels (million tonnes)

23.06

26.46

(12.8)

2.64

2.68

(1.5)

Sales through filling stations (million tonnes)

9.77

10.49

(6.9)

*Adjusted EBITDA includes the share of EBITDA of associated and jointly controlled companies accounted for under the equity method.

**Free cash flow (FCF) in FY 2020 reflects net investment cash flow, including acquisitions and sale of property, plant and equipment (PP&E), licenses and intangible assets in the amount of ₽399,641.

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