Russia's Gazprom posts $10B profit in Q2

AP News
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Posted: Nov 09, 2011 3:43 AM
Russia's Gazprom posts $10B profit in Q2

Russia's largest gas producer Gazprom said Wednesday that its net profit surged 78 percent to $10 billion in the second quarter of the year, boosted by stronger sales amid the Arab uprisings that slowed exports from the Middle East region.

The Moscow-based company said Wednesday that its net profit rose from 170 billion rubles ($5.6 billion) to 303.7 billion rubles ($10 billion) in April-June this year in line with analyst estimates.

The company earlier said it expected hefty profits after several gas-rich Arab nations got caught in unrest and revolutions.

Gazprom's gas sales to Europe, the company's key market, nearly tripled in the second quarter compared with a year ago to reach 344 billion rubles ($11.4 billion).

The average price per thousand cubic meters of gas went up from 8,646 rubles ($284) in January-June last year to 10,356 rubles ($342) in the first half of this year, which Moscow-based investment bank Troika Dialog described as "exceptionally accommodating" for the state-controlled gas giant.

Gazprom on Tuesday launched a key gas pipeline that would bring Russian gas to northern Europe under the Black Sea.

Analysts warned, however, that Gazprom's future might not be so bright, with higher taxes looming and European customers bargaining for lower prices.

"The company's outlook remains highly uncertain given pressures on European gas pricing with oil-linked contracts likely to be in serious danger longer term, competition at home from independents, a higher tax burden and a continued capacity build-up that may not be supported by demand," Troika Dialog said in a note to investors.