MOSCOW-Russian state-controlled gas giant PAO Gazprom said net profit fell 5% in the first quarter despite higher revenues, as the price in its most-lucrative European contracts dropped and expenses rose.
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Gazprom’s average gas price realised in Europe and non-FSU markets in 1Q 2016 fell by 22% in ruble terms year-on-year to $216.95 (or 14,049.3 rubles)/000 ft including excise tax and customs duties – equivalent to just $6/mn Btu.
The EU has been trying to reduce its reliance on Russian gas amid tensions with Moscow over the Ukraine crisis.
From January to March the state-run behemoth registered a drop in profits to 362 billion rubles ($5.6 billion, 5 billion euros) from 382 billion rubles in the same period past year, a statement said.
Since the U.S. Sabine Pass LNG terminal started exporting gas this year, only 2 of 20 ships have departed for Europe – heading to Portugal and Spain – while the others have sailed to South America, the Middle East and Asia. Gazprom’s bottom line was also hit by a foreign-exchange loss of 25 billion rubles as the ruble weakened compared with a year earlier.
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Earnings for the period fell to 373 billion Russian rubles ($5.8 billion), from Rbs389 billion in 2015, after operating expenses rose notably and income from joint ventures and associates fell.
