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. Last Updated: 07/27/2016

Gazprom Eats Away at Itera's Business

Itera, Russia's third-largest gas supplier, said Monday sales plunged 51 percent in 2003 as Gazprom, the world's biggest natural gas producer, squeezed it out of some markets and regained some gas fields.

Gas sales fell to 30.7 billion cubic meters last year from 63 bcm in 2002, Moscow-based Itera said in a statement. Net income totaled $57.9 million in 2003, the company said. Itera, which reported profit for the first time, did not give figures for the previous year.

The fall in gas sales exceeded the company's forecast in May for a 37 percent drop. Itera is being pushed out of former Soviet states such as Turkmenistan, and its output declined after Gazprom regained control of two units that Itera was allowed to take over under former Gazprom CEO Rem Vyakhirev.

"Itera has fallen out of favor with Gazprom," said Timerbulat Karimov, an analyst at Aton brokerage. "The fall in Itera's sales will likely be seen favorably by Gazprom investors. Their worry is whether any other vehicle may emerge and take Itera's place at Gazprom's side."

Itera's own production of gas fell by more than a third to 14 bcm in 2003, Itera spokesman Yevgeny Ostapov said. That allowed Novatek to overtake Itera as Russia's second-biggest producer, by increasing output 46 percent to 20.4 bcm. Itera plans to keep output unchanged this year, Ostapov said.

Itera, which invested $191.9 million last year to develop gas fields, plans to spend $201.6 million in 2004 to develop three fields and explore 11 others, including one off the Turkmen shore of the Caspian sea, the company said in the statement.

Gazprom CEO Alexei Miller spent almost three years regaining assets lost by Vyakhirev, who was fired by President Vladimir Putin in 2001.

Gazprom is looking for larger gas supplies from Turkmenistan, Kazakhstan and Uzbekistan to meet export contracts and maintain deliveries to Russian customers, as it competes with Itera for gas-producing assets and markets in the former Soviet Union.