Russian gas giant Gazprom said yesterday its net profit surged 71 percent in the first quarter as a weak ruble compensated for declining sales and lower energy prices. The net profit of 382 billion rubles ($5.9 billion) compared favorably to the 223 billion rubles in the first quarter of 2014, the company said in a statement.
Gazprom acknowledged that the result was partly attributable to the "increase in average prices in ruble terms." Most of Gazprom's costs are in the battered Russian currency, while most of its revenues are in dollars or euros. The ruble lost nearly half its value in 2014 but slightly recovered after energy prices stabilized. A recent slump in energy prices, however, last week saw the Russian currency hit its weakest level against the dollar since February. The profit figure exceeded analysts' predictions, averaging 347 billion rubles for the January-March period, Interfax news agency reported. But while sales revenues were up, Gazprom's operating profits dropped by 3 percent to 459 billion rubles and sales volume was down 10 percent to 132.3 billion cubic meters (bcm).
Russia's economy has slumped into recession on the back of lower oil prices and Western sanctions over the Ukraine crisis. The Russian Ministry of Economy said last month it expected Gazprom's production to drop to 414 billion bcm this year, which would be an all-time low.
Gazprom has recently encountered difficulties with some of its partners, including conflict-hit Ukraine. In June, Kiev suspended purchases of Russian gas from the company in the latest pricing dispute. Gazprom was also accused by its Turkmen counterpart last month of being "insolvent" and of refusing to pay for gas supplied by the isolated Central Asian state.
