Gazprom Neft Profits Double

Russia's Gazprom Neft Q1 profit, sales soar.

MOSCOW, July 21 (Reuters) - Russian oil firm Gazprom Neft, the oil arm of gas export monopoly Gazprom, said on Monday its first quarter net profit more than doubled on higher oil prices and higher sales of oil due to an acquisition.

The firm said in a statement its net profit under U.S. Generally Accepted Accounting Principles (GAAP) rose by 110 percent to $1.41 billion in the first three months of 2008 compared to the same period a year ago.

Gazprom Neft, Russia's fifth-largest oil producer, said the results were supported by higher oil prices, increased sales of oil and refined products and high refining margins.

Revenues increased by 90 percent to $7.87 billion. Last year's acquisition of half of Tomskneft, a former production subsidiary of bankrupt former rival YUKOS, has allowed Gazprom Neft to boost sales despite flat production, analysts said.

The net profit figure came above some of the analysts' forecasts. Analysts at Renaissance Capital and Citi expected the firm to report net profit of about $1.2 billion.

In the fourth quarter of 2007, Gazprom Neft's net profit was $1.32 billion and revenues amounted to $6.42 billion.

The firm said its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 83.9 percent to $1.92 billion.

"We hope to maintain positive dynamics and boost our financial means to fulfil the company's strategic goals," Gazprom Neft's president Alexander Dyukov said in the statement.

Gazprom Neft also said its capital expenditures rose by 85 percent to $781.2 million in the first quarter of this year. It plans to increase capex by 36 percent to $3.7 billion in the whole year to increase stagnating output.

The firm has been fighting falling production since it was purchased by Gazprom in 2005 from former owner, billionaire Roman Abramovich. Last year's production of around 43 million tonnes was flat on 2006.

The firm said its operating expenses slightly decreased to $510.8 million in the first quarter from $519.8 million in the first three months of last year.

Gazprom Neft Aims to Become Russia’s Leading Oil Producer

Gazprom Neft (GZPFY.PK), the oil production subsidiary of Gazprom (OGZPY.PK), has stated in its 2007 Annual Report that it expects to more than double oil output to 2.0 million barrels per day by 2020 from a production average of 864,000 bpd in 2007. A production figure of 2.0 million bpd would be higher than all other individual Russian oil producers

Abiotic FSB Petrostate

Marshall Goldman's new book Petrostate: How Russia strives to dominate oil.

For anyone with knowledge of economic warfare, the opening scene in Marshall I. Goldman's new book evokes a shudder. Russian hosts take him into a darkened room that is the "brain center" of Gazprom, the world's largest producer of natural gas, in an office building high above Moscow.

"In front of me," Mr. Goldman writes, "covering the whole 100-foot wall of the room, was a map with a spiderweblike maze of natural gas pipelines reaching from East Siberia west to the Atlantic Ocean and from the Arctic Ocean south to the Caspian and Black seas. Manipulating this display were Gazprom dispatchers, three men controlling the flow of Gazprom's gas to East and West European consumers of this Russian natural gas monopoly . . . . "

With a flick of switch, these dispatchers sitting in this Moscow room could freeze - and have frozen - entire countries. At the very least, they could send their citizens off in a panic in search of sweaters, scarves and gloves. What an empowering feeling. Should they choose to, these Gazprom functionaries could not only cut off natural gas from the furnaces and stoves of Germany's houses but also the natural gas that many German factories need for manufacturing a range of products from ammonia fertilizer to plastics.

Now, to be sure, as Gazprom officers told Mr. Goldman for his book, "Petrostate: Putin, Power, and the New Russia," "politics never, ever affect their calculations." Sure, and your check is in the mail. The first week in July, Russia sharply curtailed oil exports to the Czech Republic in apparent retaliation for that country's agreement to host a radar facility associated with a U.S. anti-missile system.

Mr. Goldman, professor emeritus at Wellesley College, and long associated with the Davis Center for Russian Studies at Harvard, speaks with authority. He has advised U.S. presidents and the CIA on Soviet and Russian affairs. "Petrostate" documents how President Vladimir Putin used petroleum riches to bring Russia back from near-bankruptcy in 1998 to its current strength in world economic affairs.

As he summarizes, the book "is a tale of discovery, intrigue, corruption, wealth, misguidance, greed, patronage, nepotism, and power . . . a little something for everyone." As I read of how Mr. Putin's cronies muscled aside competitors to take control of formerly state-owned oil companies, the thought flickered through my mind, "John D. Rockefeller meet Tony Soprano." ...

One ominous sign is that many of the jokes formerly told about Soviet leaders now target Mr. Putin. In one, Stalin comes to Mr. Putin in a dream and says, "Vladimir, I have two bits of advice for you: kill your opponents, and paint the Kremlin blue."

Mr. Putin ponders a moment, then asks, "Why blue?"