After almost a year and a half of keeping its performance under wraps, Russia’s fourth-largest oil producer, Gazprom Neft, has released a financial report for the first half of this year, posting declines in top and bottom lines, although still beating analysts’ expectations.

The ability of the Russian oil industry to retain profitability and maintain production under the burden of international sanctions is being closely monitored by Western authorities as Russia’s invasion of Ukraine moves into the 19th month, with no sign of abating.

In December, the US and Europe imposed the price cap of $60 per barrel on Russian seaborne oil shipments, with the country’s most commonly traded blend, Urals, never rising higher during the first half of this year.

In its shortened consolidated statement, Gazprom Neft said its gross revenues fell by almost 15% to 1.55 trillion roubles ($15.5 billion) in the first half of this year against the same period of 2022.

Net profit declined at a higher pace, down over 40% against last year and ending at about 304 billion rubles.

Moscow-based brokerage BKS said that Gazprom Neft’s end figures were above its expectations and retained its “buy” recommendation.

Moreover, reported revenues were high enough for the brokerage to expected Gazprom Neft to announce interim dividends later this year.

Most of any such dividends will go to the producer’s ailing parent, state-controlled gas monopoly Gazprom that holds a stake of about 96% Gazprom Neft.

Last year, Gazprom lost about three-quarters of its European gas market share as it halted pipeline deliveries to the continent, refusing to respect its long-term contractual commitments.

In terms of the sequential quarterly performance, Gazprom Neft reported revenues of 822 billion roubles for the first quarter and 731 billion roubles for the second quarter of this year.

However, net profit for the first quarter ended up higher than for the second, at 164 billion roubles against 140 billion roubles, according to BKS.

Cash and equivalents, held by the producer, fell twice to 216 billion rubles by end of June compared with the end of December.

No material change

Gazprom Neft has refused to disclose its oil and gas production figures, saying in the financial report that it is withholding information that may be used for the detriment of the group and its customers, and it is permitted to do so by Russian legislation passed in response to international sanctions.

“The operating business environment had not changed materially [for Gazprom Neft] in the six months ended 30 June 2023,” the producer said.

Upstream earlier reported that the Russian government has increased the levy on producers to raise more taxes. About a third of the Russia’s budget is being spent on the military.

Before the war, in 2021 Gazprom Neft reported a 6% rise in oil and gas production to over 691 million barrels of oil equivalent, mainly the result of higher gas production.

Although Moscow has made official oil production figures classified information, Russian state statistics committee Rosstat said this week that associated gas production jumped by almost 5% to 61.5 billion cubic metres between January and July this year against the same period of 2022.

This can be seen as an indication of Russian oil production at least not declining in this period, because associated gas — which surfaces with oil — has been in direct correlation to actual oil production in previous years, according to the Energy Ministry.