Novatek Jumps Most in Five Weeks on LNG Export Plan, Earnings

OAO Novatek (NVTK), Russia’s second-biggest natural-gas producer, rose the most in five weeks in Moscow trading after earnings beat estimates and the government said it may ease export restrictions by the end of the year.

Novatek climbed 3 percent, the biggest one-day gain since July 2, to close at 348.62 rubles.

The company is Russia’s largest gas producer after OAO Gazprom, which has a monopoly on exports. Deputy Prime Minister Arkady Dvorkovich said today that the government will meet in September to discuss allowing other companies to ship liquefied natural gas, and new legislation could be approved by year-end.

“The law has been drafted and should be submitted to the government in the next few days,” Dvorkovich said. Gas buyers in China and Japan have said they’re ready to buy LNG from other Russian producers, according to the deputy premier.

Novatek today reported a 20 percent jump in second-quarter profit as sales volumes increased and prices gained.

Net income rose to 11.6 billion rubles ($353 million) from 9.66 billion rubles a year earlier, exceeding the 11.3 billion-ruble average estimate of 11 analysts surveyed by Bloomberg. Revenue advanced 29 percent to 58 billion rubles.

LNG Exports

Novatek is building a $20 billion plant on the Arctic Yamal Peninsula to produce LNG, or gas chilled to a liquid for transportation by tanker. President Vladimir Putin said in June that Russia should consider liberalizing LNG shipments to add sales to Asia, outside the reach of Gazprom’s pipelines.

Gas sold directly to end-users expanded to 89 percent of Novatek’s total sales in the second quarter from 62 percent a year earlier, the Tarko-Sale, Siberia-based company said. Revenue was buoyed by new contracts with EON SE’s Russian unit, OAO Severstal (SVST) and OAO Mosenergo.

The company’s average gas price increased by 14 percent in the period, reflecting an increase in the regulated tariff introduced in July 2012. Gas sales volumes rose 8.8 percent to 14.6 billion cubic meters.

To contact the reporters on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net; Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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