Russian energy giant Gazprom has announced a 71 per cent rise in profits on the back of a weak rouble, which boosted the value of the company’s overseas earnings in the local currency.
Net profit for the first quarter of the year was 382 billion roubles (£3.8 billion), with total sales rising six per cent to 1.65 trillion roubles.
The weak currency counterbalanced a 10 per cent fall in the volume of sales, which was mainly due to sanctions imposed by the West.
They were implemented after Russia annexed Ukraine's Crimea region in March 2014, and they have been escalated during the fighting in eastern Ukraine, where Moscow is backing separatist forces.
These, along with declining oil prices, have hit the country hard, as the economy relies heavily on revenues from oil exports. Its economy shrank by two per cent in the first three months of this year, which represented the first contraction since 2009.
The Central Bank of Russia (CBR) expects the Russian economy to contract by between 3.5 per cent and four per cent in 2015.
The higher profits come as fresh US sanctions were announced late on Friday (August 7th), which pushed Gazprom shares down to as much as 2.4 per cent – to their lowest in more than a week.
The US said it would curb supplies of equipment to Gazprom’s Yuzhno-Kirinskoye, the company's largest offshore field.
The new sanctions, along with a lower oil price that is now back below $50 a barrel, should hit the company's revenue in the next quarters, according to analysts.
The first-quarter result may be “the last positive period for Gazprom in the new price environment” as foreign-currency revenues decline, Pavel Kushnir, a Deutsche Bank AG energy analyst in Moscow, told Bloomberg.
Gazprom charged with abusing dominant position
In addition, the company was charged by the European Commission with abusing its dominant market position in Central and Eastern European gas markets.
Antitrust regulators said it raised barriers to competition in eight EU states, including the Czech Republic, Hungary and Slovakia.
In five of those countries – Bulgaria, Estonia, Latvia, Lithuania and Poland – EU regulators accused Gazprom of charging unfair prices through calculations that link gas prices to oil prices.
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