"Astronomical Figures"

Alexey Miller talks about record profits, and Gazprom asks the state for support

The head of Gazprom, Alexey Miller, as part of supporting the concern's share price, made a special statement in an interview with the Vesti TV channel. “Our annual income is just astronomical,” he said. — Based on the results of 2008, I can say that our revenue will be about $100 billion. And our net profit will be somewhere around $30 billion. For a giant like Gazprom, the financial crisis is not an exciting factor. We feel absolutely confident. I can say that today Gazprom operates in price conditions that are very, very favorable for the company. The era of cheap oil and gas is over. Even despite the financial crisis, hydrocarbon prices will still remain high. At the same time, in the medium term, according to specialists and experts, they will increase.”

Nevertheless, Gazprom, along with oil companies, appealed to the government with a request to provide financial assistance. Mr. Miller, however, did not celebrate this episode. The fact is that even in conditions of price prosperity, Gazprom spends more than it earns . And in the coming years it is going to increase investment spending (this is due to the need to urgently develop Yamal, build a new gas pipeline system in the Far East and implement the Shtokman project on the Barents Sea shelf).

Mr. Miller's speech, apparently, was caused by a very sharp drop in the price of Gazprom shares. On Friday, the concern's securities fell in price on the RTS by 10.7%, to $3.7 per share, that is, they fell below the psychological mark of 100 rubles. In this regard, he was forced to voice favorable forecasts for revenue and profit. Last year, Gazprom's income was $97 billion, and its profit was $3 billion less than Mr. Miller predicts for this year. Thanks to record high oil prices at the beginning and middle of the year (export prices for gas are tied to them with a lag of six to nine months), the gas monopolist, which does not have such a massive fiscal burden as the oil industry, really does not experience problems with revenue. True, impressive investment and operating expenses do not allow the company to do without significant external loans, which increase from year to year. Mr. Miller assures that, despite the crisis, there are no problems with credit resources: Gazprom feels absolutely stable financially. I can say that, on the contrary, there is a queue of banks that would like to lend to the concern. Another thing is that Gazprom has its own significant financial resources, and we actually select partners very seriously and carefully.”

Meanwhile, in the first quarter of next year, the current decline in oil prices will be reflected in Gazprom’s wallet. And it is not a fact that lost income will be able to be compensated on the global financial market if the crisis continues to gain momentum.

Gazprom has received an invitation to work on the Alaskan shelf, Alexey Miller said. According to him, in the near future the concern will hold “a round of meetings to discuss what blocks its American colleagues could offer.” Mr. Miller recalled that “three companies are actively represented in Alaska - ExxonMobil, BP and ConocoPhillips, which also have projects in Russia.” He did not say which company from this trio is ready to let Gazprom into production in the United States. Most likely we are talking about ConocoPhillips, whose head, James Mulva, flew to Alaska during the visit of a representative delegation of Gazprom there and took part in a seminar organized on this occasion.

Alexey GRIVACHS