Novatek profit plunges 62 percent as sanctions hit LNG business

Wednesday 11 February 2026 - 10:20

By: Dakir Madiha

Novatek profit plunges 62 percent as sanctions hit LNG business

Russian energy company Novatek reported a sharp drop in net profit for 2025, underscoring the growing strain Western sanctions are placing on Moscow’s liquefied natural gas sector. The country’s largest LNG producer said net income fell to 183 billion rubles, or about 2.37 billion dollars, down more than 62 percent from 493.5 billion rubles recorded in 2024.

The reversal comes after a year of strong earnings in 2024 and highlights mounting difficulties for Russia’s ambitions to expand its global LNG footprint.

In financial statements released on February 11, Novatek reported total revenue of 1.45 trillion rubles for 2025, compared with 1.55 trillion rubles a year earlier. The company described the accounts as consolidated statements subject to disclosure, prepared under Russian government decrees that allow firms to withhold sensitive information that could harm the company or its counterparties.

As a result, Novatek did not provide a detailed breakdown of the factors behind the earnings decline. Operating profit dropped from 325 billion rubles to 281 billion rubles. A line item labeled other income expenses net shifted from a gain of 249 billion rubles in 2024 to a loss of 42 billion rubles.

The weaker results coincide with persistent challenges at Novatek’s flagship Arctic LNG 2 project, which has been under extensive United States and European Union sanctions since production began in December 2023. Restrictions have curtailed access to specialized ice class tankers and Western technology, forcing the company to offer substantial discounts to Chinese buyers.

According to Reuters, Novatek has cut prices by 30 to 40 percent since August 2025 to secure buyers for Arctic LNG 2 cargoes. The project was originally designed to produce 19.8 million metric tons of LNG annually but has struggled to operate at full capacity due to equipment shortages and logistical constraints.

Russia’s Deputy Prime Minister Alexander Novak said in December that the country has postponed by several years its target of reaching 100 million metric tons of annual LNG output because of sanctions. Total Russian LNG production fell to 32.9 million metric tons in 2025, according to official statistics agency Rosstat.

Further uncertainty looms as the European Union plans to ban imports of Russian LNG from January 1, 2027. Novatek also faces intensifying competition from expanding United States LNG exports to Europe and Qatar’s dominant position in Asian markets.