Gazprom PAO (ADR) (OTCMKTS:OGZPY)
Gazprom PAO (ADR) (OTCMKTS:OGZPY) says its first-quarter revenues rose by 4.4 % helped by growth in exports to the European Union. The world’s largest gas producer generated revenues of $31 billion for the first three months of the year even as several European nations accused it of abusing its position as the bloc’s largest gas producer.
However, a 4.4% increase in revenues could not prevent Gazprom from posting a 2.6% drop in operating profit to R294 billion. The company has attributed the decrease to currency fluctuation, the Ruble having lost substantial ground against the major currencies. Profit after taxes also dropped by 6% to R350 billion.
Gazprom PAO (ADR) (OTCMKTS:OGZPY) is currently under investigation by the European Union over claims it misuses its substantive market position which currently stands at 34%. Even as the company continues to negotiate with the European Commission to end an anti-trust probe, it continues to face political pressure to shut down its Nord Stream 2 pipeline that, when complete, will double its capacity.
Pipeline Expansion Plans
Amidst the ongoing standoff in Europe, Gazprom is planning to continue to strengthen its market position. The gas producer has already started construction works on its TurkStream gas pipeline that will stretch across the Black Sea from Russia to Turkey.
“Today, we started the practical implementation of the TurkStream gas pipeline project: pipe-laying within the offshore section. By late 2019, our Turkish and European consumers will have a new, reliable source of Russian gas imports,” said Gazprom chairman Alexey Miller
Switzerland Allseas Group has been tasked with the responsibility of laying out the 900 km pipeline using its pioneering Spirit pipe-laying vessel. The pipeline will be used to serve Turkish consumers upon completion of the first phase, with consequent phases being used to deliver gas to southeastern parts of Europe.
Naftogaz Arbitration Blow
Separately, Ukraine says it has won a three-year $80 billion legal battle pitting Gazprom over its controversial ‘take or pay’ claim. A ruling by the Arbitration Institute of the Stockholm Chamber of Commerce relieves Naftogaz of paying billions of dollar for gas supplies that were not supplied by the Russian company although it was envisioned in a controversial contract.
Gazprom PAO (ADR) (OTCMKTS:OGZPY) also suffered a big blow given that the ruling ordered the review of pricing for transit supplies through Ukraine to Europe.
Gazprom PAO (ADR) (OTCMKTS:OGZPY) stock shed 1.20% in market value in Thursday trading session to end the at $4.11 a share.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Artemis grew up in Boston, MA. After college she talked her way into a job with a leading mutual fund family working as an equity analyst. In this role, emerging companies became her specialty. Artemis now devotes her time to raising her twins and consulting to mutual funds.