FSUOGM: Gazprom rides the price surge

Russia’s national gas champion Gazprom is on track to pay out record dividends this year, after riding the surge in European gas prices during recent months. But despite its financial numbers, Gazprom faces risks ahead, with the fate of its Nord Stream 2 pipeline still hanging in the balance, while its rival Rosneft takes advantage of the company’s troubles to push for access to the European gas market.

Gazprom’s net income tripled year on year to RUB521bn ($7bn) in the three months ending June 30, on the back of a rebound in gas demand supported by economic recovery, extreme weather and increased storage injections. At the same time, supply has remained constrained.

The company sold its gas on average for RUB15,469 ($211) per 1,000 cubic metres in Europe in January through June, versus only RUB9,475 a year earlier. And it can look forward to even wider margins ahead, with the tightening market pushing wholesale gas prices at European hubs to over $600 per 1,000 cubic metres in recent days.

In light of the spike in its earnings, Gazprom has declared a dividend payment of RUB845bn ($11.5bn), or RUB17.85 per share, for the first half, which is more than was paid out during the whole of 2018, a year that set a record for dividends. It has pledged a payout of no less than RUB36 per share for the full year.

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