Gazprom reports bumper 35 bln dlr profits

28th April 2011, Comments 0 comments

Gazprom, the world's biggest gas firm, on Thursday reported colossal profits for 2010 of over $35 billion, up 24 percent and reinforcing its status as a cornerstone of the Russian economy.

Its full year net profits were 968.6 billion rubles ($35.2 billion), one of the biggest annual profits in Russian corporate history.

Gazprom said that the increase from the 2009 figure came on a rise of 20 percent in total sales to 3.597 trillion rubles ($130.7 billion), which included a 14-percent increase in net sales of gas in the period to 2.186 trillion rubles ($79.4 billion).

"This increase was due to the growth of volumes of gas sold to Former Soviet Union countries," it said.

Gazprom said it was helped in Russia by an increase in the average domestic price for gas set by the Federal Tariffs Service and in other former Soviet countries by an increase of average realised prices in Russian ruble terms.

The profits were also boosted by a 77 billion ruble ($2.8 billion) gain from the sale of its stake in leading Russian independent gas producer Novatek.

Gazprom, founded in 1989, grew out of the USSR's Gas Industry Ministry and was part-privatised from 1993 in the much-criticised sale of state assets in post-Soviet Russia.

The government has retained a controlling stake of just over 50 percent, according to the company's website and the firm is now a cornerstone of the modern Russian state.

Gazprom is playing a key role in the hugely ambitious South Stream pipeline project to ump gas to Black Sea countries by avoiding Ukraine, a scheme it regards as crucial for the security of Russia's future energy exports.

It is also a leading partner in the Nord Stream project, which runs through the Baltic Sea and is due to deliver the first gas supplies to the European Union by the end of the year.

Yet Gazprom is also trying to diversify exports beyond Europe and the former Soviet Union and is expecting to sign a massive gas sales contract with the China National Petroleum Corporation (CNPC) in the middle of this year.

"Among the positive short-term triggers, we highlight a possible agreement with China which could prompt revisions in our long-term volume growth assumptions," said analysts at VTB Capital.

Gazprom will also be hoping for a strong 2011 performance owing to high oil prices -- which affect the price of gas -- liberalisation of the Russian gas market and a global economic recovery.

Analysts at Merrill Lynch Bank of America said that Gazprom was well placed to benefit from global market supply pressures caused by the Japanese earthquake and the unrest in the Middle East.

The fourth quarter "was generally characterized by still stagnant volumes but rapidly accelerating European spot price," it said.

According to Gazprom, it has the right for development of one fifth of world's gas reserves and provides for one sixth of world's gas production.

"After the decrease of certain operating indicators of the Gazprom Group in 2009, their gradual recovery seems to have started," it said in its annual report.

"Nevertheless, the future demand for natural gas and other energy resources remains uncertain in the reporting year," it added.

It said that as of year-end 2010, its proved and probable reserves were 22.5 trillion cubic metres of gas, 719.3 million tons of condensate and 1.18 trillion tons of oil.

© 2011 AFP

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