The world's largest gas company Gazprom today reported USD 38 billion in net profits for 2012, the third-biggest profits of any global company, but the figure was down around 10 per cent from the year earlier due to falling sales and rising costs.
Profits for 2012 amounted to 1.183 trillion rubles (USD 38.17 billion) compared to 1.307 trillion rubles (USD 42.2 billion) in 2011, the leviathan Russian company said in a statement.
Gazprom said that during the year net sales of gas fell by six per cent as deliveries to Europe and other foreign countries rose just two per cent while those to the ex-USSR states fell 17 per cent.
Operating costs meanwhile shot up by 18 per cent.
The fall in profits for the company, which controls around one quarter of the world's gas reserves, was the first in a decade.
The earnings left Gazprom with the third biggest profits of any cooperation worldwide in 2012 after ExxonMobil which posted USD 45 billion of profits and Apple with almost USD 42 billion.
However this still represented a downward trend from 2011 when its mega profits made it the world's most profitable firm ahead of both ExxonMobil and Apple after currency conversions.
The state-controlled company, which was created out of the USSR gas ministry, is a cornerstone of the modern Russian state under President Vladimir Putin and a key earner of foreign currency.
However over the last year it has been operating in a hugely difficult environment amid an economic slowdown, falling demand and increased competition on the domestic market from homegrown rivals such as Novatek.
There has also been mounting criticism of Gazprom's pipeline-based delivery strategy at a time when liquid natural gas is becoming more in demand, and concern that it is too late to the shale gas boom.
The firm's chief executive Alexei Miller told state media last month that the "shale revolution" was "a bubble" and that Gazprom did not intend to shift strategy.
However President Vladimir Putin was more equivocal last week, saying Gazprom needed to be "as attentive as possible" to growing shale gas production worldwide.
The Kommersant Vlast weekly reported this month that the Kremlin was considering a split of Gazprom into transportation and production arms in order to better ensure its future.
The option would bring the company into line with EU energy rules as Brussels works actively to reduce its dependence on Russian gas.
Analysts at UBS wrote this week that Gazprom's current situation was marked by "production decline (and) a glut of gas in a highly competitive gas market".
VTB Capital meanwhile described 2012 as an "annus horribilis" in which Gazprom lost domestic market share in a macro and regulatory environment that "could hardly have been worse".
Against this background Gazprom's shares, once a favourite among Russian small shareholders, have endured a torrid time, falling 29 per cent since mid-September according to VTB.
