Russia’s largest liquefied natural gas project, Yamal LNG, doubled its revenues and net profit last year, allowing the company to cut debt to its shareholders by three times, according to its latest unconsolidated report under the country’s accounting standards.

The report, obtained by Moscow-based news agency Interfax, says that Yamal LNG’s revenues shot up by 96% to 1.1 trillion rubles ($14.7 billion) in 2022 compared with the previous year, while net profit rose to 840 billion rubles from 400 billion rubles a year earlier.

Yamal LNG together with its 50% shareholder, Russian largest independent gas producer Novatek, stopped publishing its consolidated financials under international accounting standards last year after the introduction of international sanctions against Russia in response to the invasion in Ukraine.

Investors generally consider consolidated financials to provide a better snapshot of a company’s financial health than Russian accounting standards.

The sharp jump in Yamal LNG’s revenues is linked to the company delivering more LNG cargoes to Europe in 2022 where spot gas prices hit record highs after Russian pipeline gas supplies stopped, according to Novatek.

Novatek earlier reported a healthy growth in last year’s revenues that were underpinned by Yamal LNG’s performance.

Priority to shareholders

In its report, Yamal LNG said that its overall debt fell to 1.2 trillion rubles by the end of 2022 against 1.7 trillion rubles at the start of the reporting period.

Despite the Russian restrictions on payments in US dollars and euros, Yamal LNG prioritised the repayment of its debt to shareholders that bankrolled the development at the very start, before it was able to raise project financing from international banks.

On 31 December, the operator owed shareholders some 167 billion rubles against 505 billion rubles a year earlier, the report said. The company repaid all debt to shareholders denominated in US dollars last year, it said, with all remaining debt being in euros.

Yamal LNG foreign shareholders are China National Petroleum Corporation and China’s Silk Road Fund, as well as France’s TotalEnergies, which resolved to hold its 20% stake in Yamal LNG despite its withdrawal from other Russian projects.

However, the operator still has an obligation to repay about 883 billion rubles to international banks that provided long-term financing to the development, by 2031, the report said.

Yamal LNG also owed more than 167 billion rubles to the Russian state as the project also received initial funding from country’s National Welfare Fund where excessive state revenues from oil and gas exports were accumulated.

New profit tax rate

The project’s operator has also confirmed it will pay a higher corporate profit tax of 30.% from 1 January this year against the rate of 16.5% in previous periods.

Authorities in Moscow resolved to increase the corporate profit tax for Yamal LNG and other legacy LNG developments last year in a bid to raise more revenues to offset increased military spending.

However, Yamal LNG had been successful in keeping intact its earlier granted exemption from paying a gas export tax on its LNG shipments to international markets. This tax ran at 30% of the price of exported gas for Russian pipeline supplies by state giant Gazprom last year.