Gazprom OAO, Russias state-owned gas giant, and the largest gas exporter in the world, reported poor profits for the last quarter, hurt by simmering tensions with Ukraine.
Gazprom said Q1 net profit fell by 41% on an annual basis to RUB 223 billion ($6 billion). Revenue, however, rose by 7% to RUB 1.56 trillion, while its operating expenses increased by 15% to RUB1.09 trillion.
Currently, the European Union generates 40% of the companys revenue by Russian accounting standards. Gazproms officials, who asked not to be named, because the forecast is still private, shared that the company expects a larger than a 10% decline to about $55 billion this year.
“Anti-Russian rhetoric in Europe has no effect on Gazprom’s sales in the region so far,” said Alexander Donskoy, an energy analyst at VTB Capital said for Bloomberg. “The forecast is absolutely feasible, if only the price dispute with Ukraine won’t disrupt European supplies in winter.”
The companys performance and forecast were hit by the crisis between Russia and Ukraine. Kiev has an outstanding bill of some $5.3bn to Gazprom, a debt it cant possibly pay out soon, let alone with mounting military expenses in light of the civil strife in the country.
The EU has been brokering negotiations between the Russian state-owned giant and Kiev, hoping to avoid a possible gas-crisis, similar to the one in 2009, when Russia cut off gas flowing through Ukraine, completely depriving some EU states of supply.
The negotiations, however, broke down last June, when Russian Gazprom stopped its delivery of gas supplies to Ukraine due to unpaid gas bills. The company now says that Ukraine owes it $5.4 billion for supplies, while Ukraine shared that gas prices were unfairly increased.
“It doesnt mean write-offs are over. Ukraines debt is $5.4 billion – they could write off the whole debt, though it looks unlikely,” Alexei Kokin of brokerage Uralsib said in a statement cited by Reuters.
Gazprom OAO added 0.13% to trade at RUB139.20 per share by 13:42 GMT, marking a one year change of -4.98%.
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