The world's biggest gas firm Gazprom on August 27 announced colossal profits of $16.24 billion for the first quarter, one of the biggest interim profits in history and driven by high global energy prices. The profit of 468 billion rubles ($16.24 billion) for January through March was up 44 percent from the same period in 2010.
The results underlined the massive profitability of the state-owned gas giant at a time of high global energy prices after it made $35 billion in 2010, one of the biggest full year profits ever.
Gazprom said net sales of gas increased 42 percent to 870 billion rubles ($30.2 billion) in the quarter due to higher volumes of gas sold and an increase of average realised prices for sales in all its geographical areas. Total sales for all of Gazprom's operations increased 38 percent to 1.316 trillion rubles ($45.5 billion), it said in a statement.
Gazprom in the period saw an increase of average prices of 14 percent in the period for gas pumped to European and other non-ex-Soviet customers as well as an rise in volumes sold of 12 percent.
The results - the company's best ever interim earnings - mean that Gazprom is already well on the way to topping its record performance in 2010 when it posted the biggest profits in its history. The profits easily beat market expectations. Analysts polled by Dow Jones Newswires had forecast a profit rise of just 31 percent to 427 billion rubles ($14.7 billion).
Shares traded on the RTS exchange surged in morning trade although by evening they stabilised to be virtually unchanged on the day. "The company's first-quarter results suggest that the firm will easily surpass its record earnings from just last year," said IHS Global Insight analyst Andrew Neff in a research note.
According to analysts at VTB Capital, the Gazprom profits were boosted by a revival in a European gas demand amid an "abnormally long and cold winter" as well as price rises.
In the first quarter, operating expenses increased 33 percent to 818 billion rubles ($28.2 billion), largely due to an increase in the price of gas purchased by Gazprom in Russia and elsewhere. Founded in 1989, Gazprom grew out of the USSR's Gas Industry Ministry and was partly privatised from 1993 in the much-criticised sale of state assets in post-Soviet Russia.
The government has retained a controlling stake of just over 50 percent, according to the company's website and the firm is now a cornerstone of the modern Russian state.
Yet the company has been bitterly criticised for its role in the 2009 gas crisis with Ukraine that led to major supply cuts for European consumers as well as its exceptionally close ties to the Russian political leadership.
President Dmitry Medvedev himself served as Gazprom board chairman and several of its top executives are natives of Saint Petersburg, the home town of both Medvedev and Prime Minister Vladimir Putin.