MOSCOW—Russian state gas giant PAO Gazprom said net profit in
the first quarter jumped more than two-thirds compared to last
year, as a weaker ruble boosted revenues from sales in Europe even
as volumes declined.
The 71% rise in net profit to 382 billion rubles ($5.97 billion)
came despite a 10% fall in volumes and was also helped by poor
results last year, when the company was hit by a large
foreign-exchange loss and wrote off some debt for gas owed by
Ukraine.
The results released on Monday—as usual, well after other
Russian listed companies released theirs—reflect the increased
competition that Gazprom is facing at home and in Europe, its most
lucrative market.
Shipments in Europe slid 16% because of increasing competition
and as European customers waited until the second half of the year
to buy gas for the winter, as the price will drop in line with
recent oil price declines. Deliveries on the domestic market, long
Gazprom's dominion, also fell amid pressure from rivals such as OAO
Novatek.
The increasing competition led the Russian Economy Ministry last
month to forecast that Gazprom's output could fall to an all-time
low this year of 414 billion cubic meters, from 444 billion last
year.
Analysts say that could be pessimistic, given that Gazprom is
likely to ship more fuel in the second half of the year—albeit at a
cheaper price—as European clients fill up their stores before
winter. Gazprom said deliveries to Europe and Turkey in July were
the largest ever.
"Gazprom gas is attractive for European customers now ahead of
the winter season," said Alexander Kornilov, an analyst at Alfa
Bank in Moscow.
Gazprom's position in Europe, where it accounts for around
one-third of imports, is also under pressure from the competition
regulator, which has filed antimonopoly charges against the
company. It is also being challenged by other forms of fuel.
Shipments of liquefied natural gas from North America could further
press the company if they start reaching Europe at the end of next
year, Mr. Kornilov said.
Gazprom has turned eastward to decrease its dependence on
Europe, sealing an agreement to make China its second-largest
customer. But talks on delivering larger volumes via a second route
have dragged. The U.S. on Friday placed sanctions on a huge
offshore oil-and-gas field in Russia's east, likely scuppering
Gazprom's hopes of increasing the capacity of its LNG facility
there, which delivers gas to Asia.
Write to James Marson at james.marson@wsj.com
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