Gazprom has posted record net income for the first half of the year, buoyed by resurgent gas prices in its core European export markets.

The Russian state-controlled gas monopoly said in its consolidated financial statement that its net income, attributable to shareholders, rose to 968 billion rubles ($13.2 billion) between January and June this year, up from 33 billion rubles a year earlier.

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Revenues recovered strongly, hitting 4.35 trillion rubles, up 50% on the same period last year.

However, the pace of revenue growth masked a 24% jump in operating costs, reported at more than 3.3 trillion rubles.

Europe pays

Exports have been the main revenue driver, with gas sales in Europe and China increasing by 23% to almost 121 billion cubic metres in the first half.

However, Gazprom declined to provide a country-by-country breakdown for sales from Russia, instead giving a general figure that includes third-party gas that it bought and sold internationally.

It said foreign gas sales generated 1.46 trillion rubles of revenues in the first half, against 756 billion rubles a year earlier.

Domestic demand

The recovery of domestic demand after a Covid-related slump allowed the company to deliver more than 133 Bcm of gas to Russian customers between January and June.

However, the growth of revenues for domestic sales lagged behind foreign trading activity, rising by just 17% to 574 billion rubles as authorities continue to regulate internal gas prices, set by the monopoly.

Free cash flow rose by 36% to more than 1.4 trillion rubles by 30 June, compared with 31 December 2020.

Deleveraging deferred

There is no sign yet of cash that has accumulated this year being used to reduce the company’s overall debt position, which remained almost unchanged at 4.2 trillion rubles.

China Construction Bank Corporation was the single largest creditor, with an outstanding $3.3 billion owed.

Gazprom’s revenues almost doubled to 2.1 trillion rubles in the second quarter from the same period of 2020, with net income almost quadrupling to 521 billion rubles.

Analysts in Moscow expect Gazprom to post record net income in the second half, as spot gas prices at European hubs recently hit $600 per thousand cubic metres.

The company’s unwillingness to book additional spare gas transit capacity via Ukraine for September has become a catalyst for this market move, as traders digested the potential impact of reduced flows to Europe on the continent’s preparedness for peak consumption during winter.