Russian gas monopoly Gazprom announced better than expected results, reporting a net loss of 2 billion rubles ($26 million) in the three months to end-September compared with the same period the previous year, with the foreign-exchange loss of 400 billion rubles offsetting a 14% rise in revenue to 1.29 trillion rubles.

Russia’s falling currency supported Gazprom’s ruble-denominated revenue, helping to offset export prices that fell to near the lowest in a decade.

Most of the company’s costs are in rubles while most of the profit is from abroad, with a majority of its gas-export contracts linked to oil. Brent slumped 35% last year.

While revenue from gas supplies to its lucrative European market dropped more than 25% last year to about $38 billion, full-year sales may hit a record in ruble terms.

“It’s mostly about being able to export almost as much actually as they used to export in winter months in 2013-2014,” Alexei Kokin, a senior oil and gas analyst at UralSib Financial Corp in Moscow, told New Europe on January 15. “This is about 45 billion cubic metres to non-former Soviet Union countries and that’s almost an increase of 23% year-on-year. It’s an enormous gain.”

Falling oil prices, which on January 15 dropped below $30 a barrel, have weighed heavily on the performance of the Russian economy and value of the Russian currency. The dollar rose by nearly 80% in value against the ruble between the end of September last year and a year earlier, and has appreciated further since.

Gazprom said sales volumes to Europe were up 2% for the first nine months of last year to 125.3 billion cubic metres.

Russia increased its European natural gas market dominance last year, supplying more than half of Germany’s imports as oil’s longest slump on record made its fuel more attractive. Germany, Europe’s biggest gas user, got about 55% of its foreign fuel from Russia last year, and as much as 75% in the fourth quarter. Russia, which has been supplying gas to Germany for more than four decades, has prioritised the expansion of the Nord Stream pipeline directly to Germany, despite opposition from Central and Eastern European countries.

Kokin said Germany would remain an important buyer of Russian gas in the future and Gazprom could even possibly increase its exports to Europe’s biggest economy. “The announced purpose for this second stage of Nord Stream is to bypass Ukraine. But you can’t rule out a situation when Gazprom uses all the routes, including Ukraine, including Nord Stream 2,” Kokin said, adding that it can only be avoided if the European Commission impedes Gazprom’s plans. “Otherwise, Gazprom is doing what I would hope it would do when oil prices go down, which is expand market share.”

Gazprom supplied 45.3 billion cubic metres to Germany last year. That compares with a 7.1% increase in Norwegian exports to 47.9 billion cubic metres last year.

However, sales volumes in Russia were down 5% to 150.6 billion cubic metres. “They kept losing the Russian market but that’s far less important in terms of revenues and in terms of margins,” Kokin said. “We’re going to see an improvement in the fourth quarter as well.”

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