Gazprom first-half profits rise over 66% ,price for gas in the fourth quarter would be 327 dollars per 1,000 cubic metres

The world’s biggest gas firm Gazprom said Monday its net profit for the first half of 2010 had risen by more than 66 percent to 508.2 billion rubles (16.5 billion dollars.

The profits underlined the earnings stability of the state-owned giant, which has expanded hugely over the last years and is now eyeing supplying gas to further-flung markets such as China and Africa.

Gazprom share rose 2.24 percent in evening trading, becoming the top riser on the MICEX ruble-denominated exchange.

The gas giant reported a total sales increase of 17 percent to 1.7 trillion rubles (39.6 billion euros, 55.3 billion dollars) compared to the same-period figure from the previous year.

Sales of gas increased by 6.0 percent to 1.0 trillion rubles (32.5 billion dollars) owing to higher volumes of gas sold in all of Gazprom’s areas of activity, which compensated for price falls in Europe and the former Soviet Union.

Sales of gas to Europe and other countries decreased by 10 percent as prices fell but the volume of gas sold went up by 19 percent.

Sales of gas to former Soviet countries increased by 17 percent as the volume of gas sold rose by 50 percent, offsetting a fall in prices of 15 percent, Gazprom said.

Operating expenses increased 11 percent in the period, due to higher charges from exchange rate fluctuations and tax and transit expenses, Gazprom said.

Analysts at UBS said the results for the second quarter, which saw profits of 171.4 billion rubles (5.6 billion dollars), were better than expected and helped by strong pricing for EU deliveries, well above spot market prices.

“We remain positive on Gazprom as we expect domestic gas price liberalization to continue and oil-linked contractual gas pricing in the EU to sustain for the long term,” they said in a note for clients.

Gazprom, founded in 1989, grew out of the USSR’s Gas Industry Ministry and was part-privatised from 1993 in the much-criticised sale of state assets in post-Soviet Russia.

The state has retained a controlling stake of just over 50 percent, according to the company’s website.

The company has ramped up its ambitions in recent years and is expecting to sign a potentially huge deal to supply natural gas to China by mid-2011.

Gazprom’s deputy chairman Alexander Medvedev told analysts in a conference call that the average export price for gas in the fourth quarter would be 327 dollars per 1,000 cubic metres compared with 318 dollars in the third quarter.

This would mark a substantial improvement on the average price for the first quarter of 293 dollars per thousand cubic metres and lead to an average price for 2010 of 308 dollars, Medvedev said according to RIA Novosti.