TASS reported that Gazprom has just raised its estimated profit from the 27.5% share buyback deal in the Sakhalin-2 project management company to 191.5 billion rubles (equivalent to 2.3 billion USD), significantly higher than the initial forecast of 167.4 billion rubles ($2.1 billion) - according to the report released on April 30.
The deal was made in March 2024 with a value of 94.8 billion rubles ($1.2 billion) paid in cash, helping Gazprom increase its ownership ratio at Sakhalinskaya Energiya, the operator of the Sakhalin-2 LNG project, from 50%+1 stake to 77.5%, making the group an absolute majority shareholder.
The profit of 191.5 billion rubles was recorded as a profit from a profit-taking transaction, the report stated.
The Sakhalin-2 project in the Russian Far East is one of Moscow's strategic LNG mines, which has involved many foreign corporations. Before 2022, Shell Group (UK) held a 27.5% stake, while Japanese partners Mitsui and Mitsubishi held a total of 22.5%.
However, after President Vladimir Putin's decree in June 2022 to restructure ownership, Shell withdrew from the project, while Mitsui and Mitsubishi agreed to continue participating. Shells stake was later bought by a company linked to Gazprom and the deal alone has paid super profits to the gas giant.
The deal also means Gazprom has acquired most control of Russias key LNG export project, amid continued fluctuations in the global energy market due to geopolitical tensions and sanctions.
Not only successful with Sakhalin-2, Gazprom also announced a record net profit of up to 15 billion USD in 2024 according to International Financial Reporting Standards (IFRS), in complete contrast to a loss of 7.7 billion USD in 2023.
According to Famil Sadygov, Deputy General Director of Gazprom, the profit has improved thanks to two main factors: a sharp decrease in exchange rate losses on foreign exchange loans and increased income from foreign exchange investment, enough to offset high interest costs. If the non-cash factor is excluded, Gazprom's adjusted profit will reach 17.5 billion USD.
The group's revenue also increased by 25%, to 10.7 trillion rubles (nearly 131 billion USD), the second largest in Gazprom's history, after the peak in 2022 when global energy prices exploded.
The withdrawal of cheap goods from Western partners has given Gazprom not only strategic leverage but also immediate profits of billions of USD, helping the company recover its image after a year of turmoil. The Sakhalin-2 gas project is therefore becoming a key card in the post-crisis Gazprom resettlement strategy.
