Gazprom Neft, the oil arm of Kremlin-backed fossil fuel giant, has reported record net profits of 503.4bn roubles ($6.7bn).
Its stellar performance has been powered by rising oil and gas prices, with revenue rising 54 per cent to 3.07tn roubles and net profits quadrupling since last year.
Global energy producers have enjoyed huge increases in earnings over the past 12 months, with Gazprom’s results following bumper profits and buyback schemes from BP and Shell amid a recovery in demand from pandemic-related lockdowns.
The company remains Russia’s fastest-growing in terms of output – and also revealed in its results that hydrocarbon production exceeded 100m tonnes of oil equivalent.
Gazprom Neft’s head Alexander Dyukov said: “This was one of the key targets we had set ourselves as part of the company’s long-term strategy. We also see opportunities for further production growth in 2022 and beyond.”
The company has said it expects hydrocarbon production to increase by five per cent annually from 2023 to 2024, after an expected rise of 10 per cent in 2022.
Yesterday, Russian finance minister Anton Siluanov warned the West that the country is ready to shift supplies of oil and gas to other markets – including China – should any sanctions target its energy sector.
The country’s options to re-route pipeline gas from Europe are limited, but it may have greater flexibility with oil exports.
Half its oil exports to the EU – around two million barrels per day – are delivered to Europe by the sea.
Oil prices are currently flirting with the $100 milestone, with Brent Crude recording prices over $95 per barrel earlier this week, amid fears of tightening supplies and rebounding post-lockdown demand.
Sanctions against Russia, and any consequent shortages in supplies, could see oil record prices over $100 for the first time since 2014.
Gazprom under pressure from threat of sanctions
US President Joe Biden has warned Russian counterpart Vladimir Putin that the country will face a range of stringent measures if it invades Ukraine.
This includes sanctions against its largest banks, economy and energy sector.
According to The Telegraph, bankers, lawyers and PR consultants in the City, putting together contingency plans to cut ties with Gazprom amid growing fears that it could be the target of sanctions .
UK Foreign Secretary Liz Truss has warned there will be nowhere to hide for companies linked to the Kremlin if Russia instigates conflict in the region.
Speaking on BBC’s Today Programme, Truss said that it will no longer be business of usual for Russian companies.
When questioned about the sincerity of Western sanction threats against Russia, following Gazprom’s successful bond sale in the City just days after the Salisbury poisoning in 2018, Truss argued it would be different this time.
She said: ” “I can assure you that if Russia invades Ukraine, we will be targeting all of those organisations. We will be extremely tough. I am not going to comment on exactly which organisations we will target and which financial instruments we will use, but we’ve just put new legislation in that enables us to do that and we’ve just put it in last week.”
Boris Johnson echoed this stance hours later, and cautioned Russia that Britain could block companies from raising money in London if there was an invasion.