Gazprom Reports 62% Income Drop in Third-Quarter

Gazprom reported a decrease in gas sales from 339.8 bcm in the first nine months of 2013 to 317.1 bcm in the same period of 2014, with a fall in demand from Europe, Russia and the rest of the former Soviet Union. This had an impact on net sales of gas, despite an increase in prices in all the regions.  

‘Net sales of gas decreased by RUB 39,981 million, or by 2%, to RUB 2,084,404 million in the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013’ Gazprom wrote in a note.  

The company explained that its income dropped 62% on a foreign-exchange loss, adding that an additional decline in oil prices might have serious consequences. 

‘Ongoing and any further decline may adversely affect our business, results of operations, cash flows, financial condition and potentially our capital program,’ it added.  

GAS PRICES INCREASE IN THE FORMER SOVIET UNION

Gas prices increased in rouble terms especially in Russia (+11.3% to 3,143.0 RUB/mcm) and in the other countries of the former Soviet Union (+20.4% to 10,000 RUB/mcm). The prices to Europe went up by a smaller margin to 12,509.8 RUB/mcm.

The highest increase in the former Soviet Union has to do with the current tensions with Ukraine and the suspension of Gazprom’s discounts. 

The total income for the first three trimesters plunged from 999,204 to 614,890 millions of Russian Roubles on more than doubling finance expenses (from 209,834 to 501,883 millions of Roubles).

The company was hit also by surging operating expenses, which passed from 2,596,841 to 3,018,824 millions of Roubles. 

‘The major factor leading to an increase in operating expenses was an increase in charge for impairment provisions by RUB 104,506 million, or 308%. Such an increase was mainly driven by accrual of provision for doubtful trade accounts receivable of NAK Naftogaz Ukraine in the amount of RUB 83,927 million’ the company wrote on Thursday.