Gazprom's Q1-3 Earnings Fall by a Third

Gazprom's revenues from exports in January - September fell by 31.6% to $21.4bn owing to lower prices. The data comes from the central bank's balance of payments over the period. In 3Q 16 the revenues totaled $6.5bn versus $9.4bn 3Q15. 

The exclusive right to export gas via pipeline is owned by Gazprom. Prices have fallen with the oil price and the oversupply of gas in Europe. Earlier this year, the price of oil fell to long-term lows. 

However the amount delivered rose over the same period and Gazprom is expecting a record for the year. In January - September, exports to non-CIS countries were up by 10.7bn m³ over the same period last year, reported the press-service of the company. The total export volume for January - September has not been disclosed.

Gazprom has practically unlimited opportunities for selling more to Europe. Key competitors, Norway and Algeria, cannot increase their production; Dutch output capacity has been capped; Qatar is more interested in the Asian market, LNG from the US is still relatively expensive, and there are no transportation facilities for Caspian gas.

The company makes a profit, but almost all of it is spent on capital expenditures, such as pipelines inside and outside Russia. Reduced export earnings could lead to difficulties with the implementation of the investment program of Gazprom in the following year, although the weaker rouble and its investment in domestic steelmill technology will lower its costs at home.

Azerbaijan desk