Gazprom HFO Output Drops 13 Percent in First Quarter

Weak crude and oil product prices led overall sales to decrease to $7.6 billion.

Gazprom Neft's output volume of heavy fuel oil (HFO) decreased 13.2 percent year-over-year in the first quarter of 2015 as the company continues to adjust crude refining volumes to the "current demand and pricing environment," the company said in its quarterly financial results.

The country's fuel oil market has been under pressure since legislation changes announced late last year raised fuel oil taxes to 76 percent of the tax on crude oil, up from 66 percent.

The company reported that weak crude and oil product prices had led overall sales to decrease 1.3 percent to RUB 380 billion ($7.6 billion) though increased oil production and higher sales through premium channels led earnings before interest, taxes, depreciation, and amortization (EBITDA) to rise 11.1 percent to RUB 93.4 billion ($1.9 billion).

Meanwhile, Gazprom said that it had boosted hydrocarbon production volumes 15.8 percent year-on-year to 135.14 million barrels of oil equivalent (boe).

"The increase in production volumes was driven by a combination of factors including an increased stake in the ArcticGas project, commencement of production at the Prirazlomnoye field in the Pechora Sea and at the Badra field in Iraq, as well as increased utilization of associated petroleum gas and successful implementation of advanced technologies at mature assets," the company said. 

It added that premium sales had also benefited from the expansion of the airport network in Russia and growth in the bunkering market in the Baltic and Black Seas.

Earlier this year, it was reported that increased export taxes on fuel oil in the country were worrying some exporters and suppliers, who argued that the duties would make Russian players less competitive globally.