Last Thursday (June 28, 2007) Forbes magazine reported that Russia's leading "national champion", the state-owned natural gas monopoly Gazprom, nearly doubled its profits from the previous year.
"Russian gas giant OAO Gazprom reported a doubling of full year net profit as sales surged on higher oil and gas prices and the impact of its acquisition of Sibneft in 2005."
Gazprom acquired Sibneft, one of the leading private oil companies in Russia, for $13.1 billion in late 2005. The deal made Sibneft's then-CEO Roman Abramovich the richest man in Russia.
According to Forbes, "The company said full year net profit jumped to 636 bln rubles [$24.7 billion] from 316 bln rubles [$12.7 billion] last time, on sales of 2,152 bln [$83.6 billion], from 1,384 bln [$53.7 billion] last time."
Former German Chancellor Gerhard Schroeder and Gazprom CEO Alexei Miller at a press conference about Gazprom's controversial Nordstream pipeline project
This achievement is all the more impressive considering that Russian oil exports are heavily taxed by the government. Furthermore, the populist-minded Duma has only permitted gradual increases in the rate Gazprom is allowed to charge Russian industries and consumers for natural gas, which remains a fraction of the export price.
According to Bloomberg financial news service: "Domestic gas sales increased by 15 percent to 356 billion rubles in 2006 after an increase in the average price, which is set by the Federal Tariff Service, Gazprom said. Russian officials have said domestic prices will rise until sales in Russia are as profitable as sales to Europe once transport costs are factored in."
Gazprom's profits also reveal how little the so-called "gas wars" with Ukraine and Belarus actually affected deliveries of Russian energy to Europe. Yet in spite of these facts, the message we continue to hear in the European and American media about Russia is that it cannot be trusted to reliably supply energy to the rest of the world. We are even told by some commentators that Europe would be more secure if it substituted liquefied natural gas (LNG) imports from the Persian Gulf or unstable parts of Africa for Russian gas.
One thing is clear: when it comes to Western media reporting about Russia, the "front page" and the "business page" continue to present two competing versions of reality.
Click here to read the full article at Forbes magazine, or click here to read the story from Bloomberg.