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. Last Updated: 07/27/2016

Gazprom's RAS Profits Rise 86% to $2.1Bln

Capitalizing on record gas prices last year, Gazprom said Monday its profits nearly doubled in 2000 under Russian accounting standards, but analysts said the gas monopoly's profitability still lags behind industry peers.

Gazprom's net profit for 2000 soared 86 percent to 60.748 billion rubles ($2.1 billion) against 1999's 32.6 billion rubles ($1.3 billion) on revenues of 498.9 billion rubles, Gazprom board member Alexander Semenyaka told shareholders in the western Siberian city of Tomsk on Monday, Interfax reported.

Semenyaka said Gazprom will present its results under international accounting standards, which differ from Russian standards significantly, late next month. He also said the board of directors would disclose some information regarding Gazprom's relationship with Stroitransgaz and Itera, for which it has been heavily criticized.

Analysts polled Monday said Gazprom's jump in profits where expected, but were still disappointing compared to other Russian companies in the oil and gas sector.

"Bigger revenue was expected and reflects the increase in the natural gas price on the international market from $70 to $100-$120 per 1,000 cubic meters last year — not anything Gazprom did better as a company," said Troika Dialog's Valery Nesterov.

"Gazprom improved both its revenue and profit due to the fact that its export revenue grew from $6.2 billion in 1999 to $10 billion in 2000," said Aton analyst Steven Dashevsky. He said the more accurate IAS report would surely yield smaller profit figures.

"Gazprom showed in 1999 a net profit of $1.3 billion under RAS and a loss of $3.2 billion according to IAS," Dashevsky said.

Even so, Aton is expecting that Gazprom will post an IAS profit of around $1.4 billion for 2000.

Whatever the figures, Gazprom can't match the profitability of industry leaders.

"Based on RAS numbers, Gazprom's profitability continues to lag behind its peers. Gazprom's 2000 net margin of 12 percent was significantly lower than every major Russian oil company, which ranged from 20 percent at LUKoil to 44 percent at Surgutneftegaz," Aton wrote in a morning comment.

Top oil producer LUKoil reported Monday an RAS net profit of $3.4 billion, roughly three times what it posted in 1999. No. 2 Yukos expects to post a profit of $2.5 billion and No. 3 Surgutneftegaz posted a net profit of $2.3 billion, both increasing the profit figures by over twofold. These figures are also under Russian accounting standards.

"Figures speak for themselves. Surgut produces 10 times less than Gazprom and yet posts a higher net profit," said Gennady Krasovsky, oil analyst at NIKoil brokerage.

"The figures call for a pressing restructuring of Gazprom. Today Gazprom represents what the oil sector was like before it was divided up and privatized. Private companies where management was driven by the will to survive proved effective. It is obvious from the results that Gazprom needs to be restructured," Krasovsky said.

A major overhaul of Gazprom has been one of the most contentious issues for the market and has been fiercely opposed by CEO Rem Vyakhirev, whose contract expires Thursday. On Wednesday, the company's board will decide whether to replace him or extend his term. Many analysts have said that a decision to sack Vyakhirev would vastly improve the investment climate for the entire market.

Vyakhirev has been plagued by allegations of mismanagement and assetstripping throughout his nearly decade-long reign at Gazprom.