2016-05-05 18:45:00
GAZPROM COSTS UPDOWN
Gazprom reported the average production cost of natural gas in 2015 at ₽1643 per 1000 cubic meters (mcm) or $27.09/mcm or $0.84/MMBtu.
The corresponding numbers for 2014 are ₽1470/mcm, $38.73/mcm and $1.21/MMBtu. The cost in US dollars is affected by the devaluation of Russian ruble. The average US dollar rate in 2015 was ₽60.66 compared with ₽37.97 in 2014.
Figure 1. Average Gas Production Cost of Gazprom, Rubles per 1000 cub m
Figure 2. Average Gas Production Cost of Gazprom, $/MMBtu
Note that the Russian government was steadily increasing the severance (mineral production) tax from 2012.
The average gas production cost in Q4-2015 is calculated at ₽1623/mcm or $24.65/mcm or $0.77/MMBtu. The Central Bank of the Russian Federation reports the average US dollar rate for in Q4-2015 at ₽65.86.
Figure 3. Average Gas Production Cost of Gazprom per 1000 cub m
The gas production cost in Q3-2015 is reported at ₽1690/mcm or $26.90/mcm or $0.84/MMBtu. The Central Bank of the Russian Federation reports the average US dollar rate for in Q3-2015 at ₽62.85.
Our calculations are based on segment information presented in the annual and quarterly financial reports of Gazprom and gas production volumes reported in the corresponding presentations.
Gazprom has slightly adjusted the production volumes for earlier periods.
Figure 4. Gas Production Cost of Gazprom per Million BTU
Cubic meters are converted to British thermal units with the help of official conversion factors of the IFRS reports of Gazprom.
1000 cubic meters of Gazprom = 32.056 MMBtu
Price of Russian gas in Europe Declines Faster than Export Cost
Export cost of Gazprom is not declining fast enough to match the drop in the price of Russian gas in Europe. The figure below illustrates results of our calculations based on the financial reports of Gazprom and documents of the Russian Federal Antimonopoly Service.
Profitability of gas exports to Europe dropped from 35 percent in 2013 to 13 percent in 2015. The profit rate plunged to 5 percent in Q4-2015 (the latter number is the author's estimation).
Cubic meters are converted to British thermal units with the help of official conversion factors of the IFRS reports of Gazprom.
1000 cubic meters of Gazprom = 32.056 MMBtu
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