Page 19 - GLNG Annual Review 2021

GLNG AUGUST GLNG

contributed the remaining 95%. fields in the third quarter of last year.
Like many figures in industry, the CFO took Novatek’s earnings also benefitted from
issue with the International Energy Agency a fall in capital expenditure to RUB47.4bn
(IEA)’s recent net-zero 2050 roadmap report. from RUB61.3bn. Free cash flow (FCF) came
Among its conclusions, the report stated that if in strong at RUB104bn, up from negative
the world continues on its pathway towards net- RUB57bn a year earlier.
zero emissions by the middle of the century, no “We achieved a very good set of financial and
further investment in oil and gas production is operational results in Q2 2021 and H1 2021
needed. because of a strong commodity pricing envi-
The report “opened some serious debates on ronment and an extended cold winter season,
the credibility of its content and the cost to soci- as well as growth in sales volumes both domes-
ety to make such a radical shift to renewables,” tically and internationally,” Gyetvay explained.
Gyetvay said. “Natural gas and crude oil benchmarks recov-
Despite its new environmental initiatives, ered significantly from their pandemic-driven
Novatek has no plans to scale back production. lows and look poised to remain relatively strong
Quite the opposite, it aims to ramp up its LNG throughout the remainder of 2021.”
supply to up to 70mn tonnes per year by 2030, The CFO said Novatek’s capital expenditure
up from 20mn tpy at present. this year was still on track to hit RUB200bn,
“We clearly understand the challenges ahead and the company is also predicting a 3% growth
of us and the need to focus on the energy tran- in full-year gas output and a 1% increase in oil
sition, but we don’t fully subscribe to some of production.
the main points raised in the special report,” LNG spot prices surged this year as the mar-
Gyetvay said. “As a large global gas producer, we ket tightened, and Novatek did its best to capital-
don’t see a future world where natural gas does ise on this trend by selling 36% of Yamal LNG’s Annual schedules
not play a key role in the decarbonisation pro- volumes on the spot market, while the rest was
cess, or conversely, a world where 90% of future delivered under long-term contracts, Gyetvay already agreed
electricity generation is powered by renewables said. But annual schedules already agreed with with customers
as noted in the report.” customers and various other factors restricted
how much spot LNG it could market. and various other
Strong numbers Novatek also noted that the fourth 0.9mn
Like many oil and gas producers, Novatek tpy train of its Yamal LNG plant had produced factors restricted
enjoyed strong numbers in the second quar- 38,000 tonnes of LNG since its launch in June,
ter, with its profit doubling year on year to when the company tested 80% of its capacity. It how much spot
RUB99.3bn ($1.35bn), primarily on the back of aims to raise capacity utilisation to 100% in the LNG it could
higher gas prices. autumn, and monitor the unit’s Arctic Cascade
The company’s revenues surged to over the next 12-18 months to see how it per- market.
RUB264.5bn in the three months ending June forms. The 19.8mn tpy Arctic LNG-2 project is
30, from RUB143.9bn a year earlier, while 45% complete, Gyetvay said.
EBITDA more than doubled to RUB163.2bn Novatek had been hoping to grow its oil pro-
from RUB71.3bn. Besides bullish prices, duction sooner but was prevented from doing
Novatek also gained from a growth in its so because of OPEC+ restrictions. As those
hydrocarbon production to 1.72mn barrels of restrictions are easing, though, plans to launch
oil equivalent per day in the period, compared the Kharbeyskoye oilfield in early 2023 are back
with 1.6mn boepd in Q2 2020. This was mainly on track. The field is expected to flow 1mn tpy
thanks to the launch of the North-Russkoye (20,000 barrels per day) of oil at full capacity.™

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