Russia: Gazprom Gas Sales Down 15 Percent

Russian gas giant Gazprom issued its financial results for the six months ended June 30, 2012.

Net sales of gas decreased by RUB 228,150 million, or 15%, to RUB 1,244,126 million in the six months ended June 30, 2012 compared to the six months ended June 30, 2011.

For the six months ended June 30, 2012 net sales of gas to Europe and other countries decreased by RUB 10,896 million, or 1%, to RUB 731,316 million compared to the six months ended June 30, 2011. This change was primarily due to decrease in volumes of gas sold by 10% or 8.7 bcm, which was partially compensated by the increase of average realized prices in RUB terms (including customs duties) by 13%.

Net sales of gas to FSU countries decreased by RUB 74,739 million, or 23%, to RUB 256,695 million in the six months ended June 30, 2012 compared to the six months ended June 30, 2011. The decrease of sales in this segment is explained by the decrease of volumes of gas sold by 29%, or 13.5 bcm, which was partially compensated by the increase of the average realized prices in RUB terms (including customs duties, net of VAT) by 20%.

Net sales of gas in the domestic market decreased by RUB 9,329 million, or 2%, to RUB 389,301 million in the six months ended June 30, 2012 compared to the six months ended June 30, 2011. This is explained primarily by the decrease of volumes of gas sold by 6%, or 9.9 bcm, in the six months ended June 30, 2012 compared to the six months ended June 30, 2011 which was partially compensated by the increase in the average domestic price for gas by 4%.

Net sales of refined products increased by RUB 91,772 million, or 20%, to RUB 543,710 million in the six months ended June 30, 2012 compared to the six months ended June 30, 2011. The increase was due to the increase of prices for refined products and increase of volumes sold.

Net electric and heat energy sales decreased by RUB 3,079 million, or 2%, to RUB 177,136 million in the six months ended June 30, 2012 compared to the six months ended June 30, 2011. The decrease in electric and heat energy sales is explained by the reduction of electricity prices at the day-ahead market and decrease in sales volumes of electric and heat energy.

In the six months ended June 30, 2012 net sales of crude oil and gas condensate increased by RUB 12,041 million, or 10%, to RUB 129,334 million compared to the six months ended June 30, 2011. The increase in net sales of crude oil primarily resulted from the Gazprom neft activities: net sales of crude oil increased by RUB 8,316 million, or 9%, to RUB 104,548 million in the six months ended June 30, 2012 compared to the six months ended June 30, 2011 mainly due to the increase in oil prices. In the six months ended June 30, 2012 net sales of gas condensate increased by RUB 3,725 million, or 18%, to RUB 24,786 million compared to the six months ended June 30, 2011. The increase of gas condensate sales was primarily due to the increase in the average realized prices and volumes of gas condensate sold.

In the six months ended June 30, 2012 net gas transportation sales increased by RUB 4,779 million, or 9%, to RUB 60,279 million compared to the six months ended June 30, 2011. The increase in net gas transportation sales was primarily due to the increase in volumes of gas transportation services rendered to independent gas suppliers.

Operating expenses increased by RUB 125,411 million, or 8%, to RUB 1,623,751 million in the six months ended June 30, 2012 compared to the six months ended June 30, 2011.

Major item in the total amount of operating expenses is «Purchased gas and oil» which decreased by RUB 40,545 million, or 9%. The decrease in cost of purchased gas mainly relates to the decrease in volumes and prices of gas purchased from third parties outside the Russian Federation. The increase in operating expenses was mostly influenced by the following items: «Taxes other than on income» (increase by RUB 90,688 million), «Transit of gas, oil and refined products» (increase by RUB 26,506 million), «Depreciation» (increase by RUB 24,939 million), «Staff costs» (increase by RUB 14,970 million), «Cost of goods for resale, including refined products» (increase by RUB 9,671 million).

In the six months ended June 30, 2012 profit for the period attributable to owners of OAO Gazprom totaled RUB 508,667 million which is RUB 263,002 million, or 34%, lower compared to the six months ended June 30, 2011.

Net debt balance (defined as the sum of short-term borrowings, current portion of long-term borrowings, short-term promissory notes payable, long-term borrowings and long-term promissory notes payable, net of cash and cash equivalents and balances of cash and cash equivalents restricted as to withdrawal under the terms of certain borrowings and other contractual obligations) decreased by RUB 24,634 million, or 2%, from RUB 1,034,941 million as of December 31, 2011 to RUB 1,010,307 million as of June 30, 2012. This decrease resulted mainly from the repayment of long-term and short-term borrowings and increase in cash and cash equivalents.

[mappress]

LNG World News Staff, November 2, 2012