The year 2011 was a real success for Gazprom

Alexander Fek, Troika Dialog

In the fourth quarter Gazprom showed very good financial results. But starting from the first quarter of 2012 the Company’s performance indicators are likely to be worse. This will happen because of price discounts granted by Gazprom to its customers and a decline in gas exports to Europe.

A negative factor is a big amount of capital investments in 2011. However, the Company has said that this year its capital investments will be considerably reduced. Let’s hope it will be this way.

The oil price is still high – almost USD 120 a barrel and Gazprom’s most contracts continue to be linked to the oil price. So, the 2012 financial statements are likely not to be worse than in 2011 and if worse than just a little bit.

Gazprom’s indicators are very sensitive to oil price levels. However, it’s very risky to rely only on a high price given such considerable capital investments.

Ekaterina Rodina

Ekaterina Rodina, VTB Capital

The year 2011 was a real success for Gazprom. However, such a situation is unlikely to repeat itself in 2012.

Overall, Gazprom showed very good operating results. Yet, a massive increase in capital investments that absorb the Company’s entire free cash flow looks rather confusing. Steady growth of capital investments is the major risk for the minority shareholders.

Pavel Sorokin

Pavel Sorokin, Alfa Bank

The gas price growth and the recovery of the gas supply volumes to Europe were the key contributors to the Company’s record-breaking financial results in 2011. Traditionally, the level of export prices has been a crucial factor influencing the Company’s performance and helping it achieve the most outstanding results.

As for the year 2012, the current level of contractual prices in Europe may help Gazprom compensate for the decrease in volumes that happened in the first quarter of 2012. However, many things will depend on the progress with sales this year.

At the same time, the Company's forecast indicators may be seriously impacted in future by the endlessly ongoing discussion in Russia around the gas severance tax.

The opinions expressed in this section may not necessarily coincide with the official position of Gazprom