Gazprom has reported its first quarterly loss in more than four years as the coronavirus pandemic slashes gas demand and prices. A 30 percent fall in the value of the rouble during the first quarter of 2020 sparked by the oil price collapse compounded a slide in both shipments and prices for the Russian state gas group that is expected to continue throughout the year.
The $1.64bn loss underscores the deep fiscal pain that the Covid-19 pandemic will have on Russia, which is reeling from both an economic recession caused by a domestic lockdown and a global slowdown and a significant reduction in government tax revenues from lower oil, gas and other commodity sales.
“The external conditions in which Gazprom and the industry as a whole operate in 2020 are assessed by market analysts as extremely unfavorable,” said Famil Sadygov, deputy chairman. The loss is the first since the third quarter of 2015.
As industrial plants and offices closed down to meet lockdown rules and quarantine measures, gas sales to Europe – Gazprom’s key market – and China were 17 percent lower compared with the same period a year earlier, while the average selling price fell 36 percent. That dragged revenue down almost a quarter to Rbs1.74tn ($24-4bn) , with the company swinging to a net loss of Rbs116bn.
Mr Sadygov said that the figure was mainly a “paper” loss because of “significant negative exchange rate differences.” “Under these conditions, the financial results that the company showed in the first quarter can be considered, to put it mildly, not bad,” he said, adding that the company would have reported an estimated profit of Rbs288bn without the forex impact and would use that figure to calculate future dividends.
Shares in the company, down 25 percent so far this year, fell 1.3 percent on the Moscow market after the results were announced.