Gazprom Q2 profits slide despite higher European sales

The world’s largest producer of gas Gazprom (MCX:GAZP) has reported a net income plunge of over 80% during the second quarter of 2017 despite increasing its sales to European gas markets.

The Russian state-owned monopoly said its net income during Q2 was Rbs47.9 billion (US$817 million), a significant fall on the Rbs244.9 billion made in the same quarter one year ago, and just below analyst forecasts of Rbs50.2 billion.

The significant profit drop was dictated by a currency shift, as the value of the rouble slid 11% against the dollar and the euro during Q2, which damaged its income as the firm denominates close to 80% of its debt in the latter currencies.

However, during the quarter Gazprom supplied 53.5 billion cubic metres of gas to countries outside the former Soviet Union, predominantly EU markets, which represented an annual increase of 4%.

Total gas sales to Europe and neighbouring countries totalled Rbs587 billion, while sales of crude oil and gas condensate to the region rose to Rbs134 billion from Rbs91 billion.

Gazprom supplies more than a third of Europe’s gas needs, with Germany and the Netherlands its biggest customers. The company is currently investing in export pipelines to Germany, Turkey and China.