Gazprom profits soar 56% to over $25 bn

Russian gas giant Gazprom on Wednesday said its net profit for the first half of 2011 had jumped 56 percent to over $25 billion, helped by higher energy prices and volumes of gas sold. The bumper results carried on Gazprom's strong performance from 2010 and the start of this year when it posted some of the biggest profits in corporate history. First half profits were 771.7 billion rubles (18.6 billion euros, $25.7 billion), powered by an increase in net sales of gas of 39 percent in the period to 1.47 trillion rubles ($48.9 billion). The strong sales were due to "higher volumes of gas sold in Russia, the former Soviet Union, Europe and other countries, which was enhanced by the increase of average realized prices," Gazprom said in a statement. Net sales of gas to Europe increased by 42 percent while Gazprom also enjoyed a 76 percent increase in sales to its former Soviet markets in the same period, it said. Gazprom's total sales, including its oil and transit operations, increased to 2.347 trillion rubles ($78.6 billion), up from 1.716 trillion rubles ($56.9 billion) in the same period last year. However operating expenses increased by 31 percent, Gazprom said. The results gave Gazprom a second quarter proft of 303.7 billion rubles ($10 billion), lower than the immense figure of 468 billion rubles ($15.46 billion) posted in the first quarter. However analysts have said this was to be expected due to seasonal factors after the winter season when gas demand in Europe increases substantially and the results came in just ahead of market expectations. 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 in Gazprom and the firm is a cornerstone of the modern Russian state under strongman leader Vladimir Putin. 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 Putin. According to Gazprom, it has the rights to develop one fifth of the world's gas reserves and provides one sixth of the world's gas production. It accounts for one-eighth of Russia's gross domestic product and supplies more than a quarter of Europe's gas needs. Despite the strength of its performance in former Soviet and European markets due to the high crude oil prices -- to which the price of Gazprom's gas is indexed -- the company is still looking for new markets. Gazprom has been in talks with China National Petroleum Corporation (CNPC) to start sending gas to China from 2015 but the two countries have yet to agree on pricing. Gazprom said last month it had agreed supply terms with Beijing for the deal which could see about 70 billion cubic metres of natural gas sent to China yearly.