As Moscow prepared for war, Gazprom sold Arctic gas worth almost €140 billion

A file photo showing Yamal LNG, Russia’s second liquefied natural gas plant, under construction in Arctic port of Sabetta, Yamalo-Nenets district, Russia on March 30, 2017. The lion’s share of Russia’s natural gas is produced in the far northern Yamal Nenets region. (Olesya Astakhova/Reuters)

The country’s main natural gas producer in 2021 recorded a 13-fold increase in profits.

Gazprom has never before had the kind revenues that it generated in 2021. In the course of the year, the company sold hydrocarbons worth 10,2 trillion rubles (€141,18 billion), up from 6,3 trillion rubles in 2020.

And net profits reached 2,159 (€30,21 billion), a 13-fold increase from 2020, newspaper Kommersant reports.

The results follow extraordinarily high prices on international markets.

In average, the value gas exported amounted to $298 per 1000 cubic meters, a doubling compared with 2020. In the last quarter of the year, the average price skyrocketed to $517 per 1000 cubic meters.

Arctic Gazprom’s key production area

Gazprom is Russia’s by far biggest producer and exporter of natural gas. In 2021, it produced 514,8 billion cubic meters, which according to company CEO Aleksei Miller is the biggest volume in 13 years. Exports to the EU and so-called “far abroad” amounted to 185,1 billion m3.

Alone Germany, Turkey and Italy increased their imports with 10,5 percent, 63 percent and 20,3 percent, Miller said in a presentation of annual results.

It is the Arctic that is Gazprom’s key production area. A lion’s share of the company’s fields are located in the Yamal Nenets Okrug, the region that stretches into the far northern Kara Sea. According to regional authorities, production in 2021 amounted to 617,5 billion m3, a 13 percent increase from 2020.

Gazprom and its regional subsidiaries alone accounted for more than 400 billion m3, or 72 percent of regional extraction, the Yamal Nenets government informs.

New export routes needed

The Yamal Nenets region is today the top priority region of the Russian oil and gas industry. Gazprom is in the process of developing several major new fields in the area, among them the Kharasavey field. From before, the company has built major new infrastructure in connection with the Bovanenkovo, a field that in 2021 delivered almost 111 billion m3.

But much of the Russian Arctic gas produced by Gazprom and other companies will soon have to look for new export routes. Following Russia’s bloody war against Ukraine, the EU is rapidly seeking to cut its imports.

Gazprom is now in the process of evaluating consequences of EU and U.S sanctions.

The powerful company is likely to significantly lose power in international markets, and 2022 will not be close to its record-beating 2021.

Aleksei Miller in January this year announced that owners will be “absolutely record high.” However, the war and its  consequences for the company might now force the company leader to reconsider and instead keep some spare funds for troubled times.

Related stories from around the North: 

Canada: Money for northern housing, mining, clean energy among Canada’s federal budget highlights, CBC News

Norway: Norwegian Oil and Gas Association kicks out Russian members, The Independent Barents Observer

Russia: Russia proceeds with Arctic project as oil embargo looms, The Independent Barents Observer

United States: Biden closes half of NPR-A acreage in Arctic Alaska to oil drilling, Alaska Public Media

Atle Staalesen, The Independent Barents Observer

For more news from the Barents region visit The Independent Barents Observer.

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