Russian gas giant Gazprom posted a 41-percent year-on-year plunge in net profit in the first quarter of 2014 partly due to Ukraine’s gas debt, the company said.
The company’s net profit amounted to 223 billion rubles ($5.963 billion) between January and March this year.
The energy giant’s sales in the same period rose by 7.0 percent compared to the same period last year to 1,558 billion rubles ($41.6 billion).
Analysts had expected the group’s profits to fall due to the falling ruble.
Ukraine receives half its gas supply from Russia but Moscow finally cut the flow of gas to its pro-Western neighbour in June after last-ditch talks failed to resolve a price dispute.
Russia is still sending gas intended for other parts of Europe through Ukraine, however.
Gazprom said its expenses went up because it had to make a provision of 71.3 billion rubles ($1.9 billion) for “doubtful trade accounts”, saying this was mainly Ukraine’s state-owned Navftogaz.
Gapzrom saw its operating expenses go up 15 percent in the first quarter compared to the figure for the same period last year, while its operating profit fell 8 percent to 472 billion rubles ($12.6 billion).
Gazprom’s sales to Europe, its main market outside Russia, rose 13 percent year-on-year to 484 billion rubles ($12.9 billion), due to increased volume of sales and a higher price.
The European Union is seeking to reduce its dependence on Russian gas, fearing interruptions to its supply over the winter.
Russia agreed to give Ukraine a hefty discount to its gas bill in December last year but then cancelled the discount when pro-Western politicians took power in February.
Source: BI Intelligence