Gazprom half-year profits fall over Ukraine debt

14th October 2014, Comments 0 comments

Russian gas giant Gazprom on Tuesday said its year-on-year net profit in the first half of 2014 fell by 23 percent, as a long-running gas dispute with Ukraine took its toll.

Six month profits for the world's largest gas producer were at 450.58 billion rubles (8.7 billion euros, 11 billion), down from 583 billion rubles (11.3 billion euros, $14.3 billion) as the firm booked some $4 billion over shortfalls in Ukraine debts.

The overall slump came despite a 13 percent rise in second quarter net profit to 228 billion rubles ($5.6 billion, 4.4 billion euros) as sales revenues also grew to 1.3 trillion rubles for the same period.

VTB Capital said the results were "broadly in line with the consensus" as analysts had figured in the impact of the gas dispute with Ukraine.

"They were weak on the back of the reserves booked by the company ($3.8 billion) related to the Ukrainian debt, and an unsupportive European market environment, with both volumes and prices sliding," VTB Capital said in a note to clients.

Gazprom in June halted deliveries to Ukraine over a furious disagreement on pricing and it claims Kiev owes more than $5 billion in back payments.

The pricing dispute came amid a broader political crisis between the two former Soviet neighbours following the ouster of Kremlin-backed president Viktor Yanukovych in February and Moscow's subsequent support for a separatist uprising in eastern Ukraine.

Russian natural gas accounted for slightly over a quarter of the total amount consumed in the European Union last year.

© 2014 AFP

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