Gazprom Posts Financial Results for '09

OAO Gazprom issued its audited consolidated financial statements prepared in accordance with International Financial Reporting Standards for the year ended December 31, 2009.

Primary factors which influence these financial statements are:

  • decrease of volumes of gas sold in all geographic segments;
  • purchase of additional 20% interest in OAO Gazprom neft, change in subsidiaries of Gazprom neft Group (acquisition of controlling interest in Sibir Energy plc and Naftna Industrija Srbije), acquisition of 51% interest in OOO SeverEnergiya, which controls ??? Arkticheskaya gazovaya kompaniya, ZAO Urengoil Inc. and OAO Neftegastehnologiya, acquisition of controlling interest in OAO TGC-1 and closing the swap agreement with E.ON Ruhrgas AG.

Net sales of gas decreased by RR 180,500 million, or 9%, compared to the year ended December 31, 2008 to RR 1,916,046 million in the year ended December 31, 2009. This decrease was primarily due to decrease of volume of gas sold in all geographical segments. With that, there was an increase of average realized gas prices to Russia and FSU countries compared to the year ended December 31, 2008.

For the year ended December 31, 2009 net sales of gas to Europe and other countries decreased by RR 157,649 million, or 13%, to RR 1,102,996 million compared to the year ended 31 December 2008. This mainly results from the decrease of average realized prices in RR terms (including excise tax and customs duties) by 10% which was aggravated by the decrease of the volume of gas sold by 9%, or 14.8 bcm.

Net sales of gas to FSU countries decreased by RR 46,585 million, or 13%, to RR 309,929 million in the year ended December 31, 2009 compared to the year ended December 31, 2008. The decrease of sales in this segment is explained by the decrease of the volume of gas sold by 41%, or 39.8 bcm, which was compensated by the increase of average realized prices in RR terms (including excise tax and customs duties, net of VAT) by 62%.

Net sales of gas in the domestic market increased by RR 23,734 million, or 5%, to RR 503,121 million in the year ended December 31, 2009 compared to the year ended 31 December 2008. This is explained primarily by the increase in the average domestic price for gas set up by the Federal Tariffs Service, which was partially compensated by the decrease of the volume of gas sold by 6%, or 18.7 bcm.

Net sales of refined products decreased by RR 112,451 million, or 17%, compared to the year ended December 31, 2008 to RR 540,505 million. The decrease was primarily due to the deconsolidation of the Sibur Group and the decline in prices for refined products.

Net sales of electric and heat energy increased by RR 60,705 million, or 45%, to RR 195,040 million in the year ended 31 December 2009. The increase in electric and heat energy sales mainly resulted from consolidation as subsidiaries of ??? WGC-2 and ??? WGC-6 and operations of OAO Mosenergo.

In the year ended December 31, 2009 net sales of crude oil and gas condensate decreased by RR 38,552 million, or 18%, to RR 176,403 million. The decrease of net sales of crude oil and gas condensate primarily resulted from the activity of OAO Gazprom neft: net sales of crude oil decreased by RR 33,456 million, or 17%, to RR 157,874 million in the year ended December 31, 2009 compared to the year ended December 31, 2008.

Operating expenses increased by RR 166,489 million, or 9%, to RR 2,096,926 million in the year ended December 31, 2009 compared to the year ended December 31, 2008.

Major item whose growth resulted in the increase of the total amount of operating expenses is purchased oil and gas (RR 77,771 million). The cost of purchased gas increased by RR 71,370 million, or 19%, and the cost of purchased oil increased by RR 6,401 million, or 4%. The increase in cost of purchased gas was mainly caused by the increase in prices for gas from Central Asia. The increase was also driven by increase of the following expenses: Transit of gas, oil and refined products (RR 53,058 million), Depreciation (RR 26,181 million), Staff costs (RR 15,370 million), Other operating expenses (RR 35,152 million). This increase was partially compensated by the cost reduction within the following items: Cost of goods for resale, including refined products (RR 17,371 million), Taxes other than on income (RR 14,223 million), Repairs and maintenance (RR 13,455 million), Materials (RR 7,146 million), Electricity and heating expenses (RR 5,316 million).

In the year ended December 31, 2009 our profit for the period attributable to owners of OAO Gazprom totaled RR 779,585 million which is RR 36,657 million, or 5%, higher compared to the year ended 31 December 2008.

Our net debt balance (defined as the sum of short-term borrowings, including current portion of long-term borrowings, short-term promissory notes payable, long-term borrowings, long-term promissory notes payable and restructured tax liabilities, net of cash and cash equivalents and balances of cash and cash equivalents restricted as to withdrawal under the terms of certain borrowings and other contractual obligations) increased by RR 353,961 million, or 35%, from RR 1,018,346 million as of December 31, 2008 to RR 1,372,307 million as of December 31, 2009. This can be explained primarily by the increase in long-term borrowings.

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