Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Gazprom Profit Jumps to $4Bln

Gazprom said Tuesday that its net profit rose 21 percent in 2002 despite lower international gas prices, as the company more than halved its tax payment to the state.

The world's largest gas firm said in a statement its consolidated net profit under Russian accounting standards rose to 121.6 billion rubles ($4 billion) from 100.4 billion in 2001, after it paid only 33.18 billion rubles in profit tax, down from 72.53 billion.

Troika Dialog brokerage said the fall in tax was due to legislation that allowed Gazprom to write off more assets under new depreciation rules, and thus decrease the tax burden.

Gazprom said its revenues rose 4.3 percent to 613.75 billion rubles, despite lower gas prices in Europe. Higher gas sales in the former Soviet Union and higher domestic prices compensated for lower export prices, boosting revenues.

However, Troika said revenues dropped 3 percent in dollar terms.

Gazprom produces 520 billion cubic meters of gas per year and exports 130 bcm to Europe, supplying a quarter of Europe's gas needs.

Troika also praised Gazprom for reducing its heavy debt burden by $400 million in 2002 to $12.6 billion.

It said it expected Gazprom's financial results under International accounting standards, due before the end of the month, to be in line with the company's RAS report, but added the firm could show higher costs, which usually do not appear under RAS.

Meanwhile, Gazprom will spend $8 billion rebuilding its pipelines in the next three years, a senior company official said Tuesday.

State-controlled Gazprom spends billions of dollars each year upgrading its domestic pipelines, most of which were brought online three decades ago. But it rarely discloses the breakdown of its capital investments.

Gazprom's export pipeline network is well-maintained and modern and does not require such huge sums of investment. But its gas must travel 3,000 kilometers from its Siberian fields before it crosses the border into export markets.

"The effect of rebuilding and refitting of the pipeline system will boost its capacity by 35 billion cubic meters per year and cut gas expenditure [on shipment] by 5 billion cubic meters a year," deputy CEO Alexander Ananenkov told a news conference.

Gazprom officials said they would attempt to draw about 30 percent of the necessary investment in the pipelines from independent producers.

Gazprom also said it will invest $2.5 billion to $3 billion per year from 2005 to reach its production goals for the next two decades, Dow Jones reported.

Gazprom plans to hike production to 582bcm to 590 bcm by 2020, compared to 522 bcm in 2002.

(Reuters, MT)