Gazprom reported Monday that its profit for the first nine months of last year declined to just two-thirds of what it earned in the same period of 2008, despite a spectacular recovery in sales that began in the summer.
The gas export monopoly's profit decreased to 479.3 billion rubles ($15.77 billion) in the period ended Sept. 30, a 36 percent drop year on year, it said in a statement.
Volumes of gas sold outside of the former Soviet Union and on the local market declined by 11 percent each in the nine months. They plunged by 50 percent in the former Soviet republics.
The overall drop comes against third-quarter figures that show that Gazprom sold 18 percent more gas to Europe year on year, or 47 billion cubic meters, after prices nominated in dollars hit bottom in July and customers rushed to stock up.
Gazprom's third-quarter profit also rose, by 33 percent to 174.6 billion rubles year on year, because the government reduced the profit tax, the ruble weakened against the dollar and investment in the equity of other energy companies — such as Sakhalin Energy and Novatek ?€” paid off well.
“Net income came above both our forecasts and consensus, largely helped by a $0.9 billion income from associates,” VTB Capital analysts said in a note to investors.
Investment company Metropol's analyst Alexander Nazarov pointed to the higher-than-expected profit from the sales of refined oil products after Gazprom's oil arm, Gazprom Neft, bought control of Sibir Energy. Through that purchase, Gazprom also gained control of the Moscow Oil Refinery.
Gazprom shares closed up 2.1 percent on the MICEX after the results were released, while the rest of the market remained mostly even.
Sales had collapsed early last year as the gas price, linked to the oil price with a lag of six months, surged to put off buyers in the crisis-stricken economies.
Demand continued to increase in the past four months, likely spurred by a cold snap that attacked Europe and Russia, Sergei Yemelyanov, deputy chief of Gazprom Export, said in a conference call with investors. Even Ukraine, which renegotiated its supply contract last year to take less gas, imported as much in January as in the same month in 2008, said deputy marketing director Alexander Mikheyev, speaking on the same call.
Gazprom also delivered about 15 percent more gas to domestic consumers last month than in January 2009, he said.
In other positive news, Gazprom paid off $4 billion in debt at the end of last year, said Pyotr Bakayev, the company's financial markets manager, also during the conference call. The move reduced its 1.5 trillion rubles in debt reported for the end of the third quarter of 2009.
?€?The debt level remains at an acceptable level,?€? Bakayev said.
He also said Gazprom hoped to settle a duties dispute with the Federal Customs Service this year. Because of the dispute, involving how gas export duties are calculated, Gazprom is having to pay larger duties than it expected, which it said last year could undermine its investment program.