Gazprom 2012 profits fall 10 percent to $38 bn: company

The world’s largest gas company Gazprom on Tuesday again reported colossal net profits for 2012 of $38 billion but the figure was down around 10 percent from the year earlier due to falling sales and rising costs.

Profits for 2012 amounted to 1.183 trillion rubles ($38.17 billion) compared to 1.307 trillion rubles ($42.2 billion) in 2011, the leviathan Russian company said in a statement.

Gazprom said that during the year net sales of gas fell by six percent as sales to Europe and other foreign countries rose just two percent and sales to the ex-USSR states fell 17 percent.

Operating costs meanwhile rose by 18 percent.

The state-controlled company, which was created out of the USSR gas ministry, is a cornerstone of the modern Russian state under President Vladimir Putin and a key earner of foreign currency.

However it has over the last year been operating in a hugely difficult environment amid an economic slowdown, falling demand and increased competition on the domestic market from homegrown rivals like Novatek.

There has also been mounting criticism of its pipeline-based delivery strategy at a time when LNG is becoming more in demand, and concern that it has missed the boat in the shale gas boom.