Gazprom has announced a sharp rise in profits thanks in large part to a weak Russian ruble.
The Russian energy giant’s net profit for Q1 2015 was 382 billion rubles ($5.9 billion), up 71% on a year earlier. Total sales rose 6% to 1.65 trillion rubles.
Gazprom sells its gas in dollars, so a weak currency means the price of gas in rubles rises.
The weak ruble helped to offset a fall in the volume of sales of almost 10%, to 132 billion cubic meters of gas.
This fall was partly due to sanctions imposed by the West following Russia’s actions in the Ukraine.
It meant Gazprom shares were down almost 2% in trading in Moscow despite the jump in quarterly profits.
With the price of oil – which is a key determinant of the price of gas – back below $50 a barrel, many analysts believe Gazprom results for the rest of 2015 will be weaker than the first quarter.
Ukraine has rejected Russia’s Gazprom gas price hike and threatened legal action.
Ukraine’s interim PM Arseniy Yatsenyuk said Moscow’s hikes were a form of “economic aggression”.
His energy minister said Ukraine would try to negotiate a gas deal, but warned that if talks failed Ukrainians should prepare for Russia to cut off supplies.
Moscow says the price change is due to Kiev’s failure to pay its bills.
Russia’s state-controlled company Gazprom has raised the cost of gas to Ukraine by 81% to $485.50 (354.33 euros) from $268.50 for 1,000 cubic metres.
Ukraine has rejected Russia’s Gazprom gas price hike and threatened legal action
The increase comes amid tense diplomatic relations following Moscow’s annexation of the Crimean peninsula.
Arseniy Yatsenyuk said Russia was trying to punish the new leaders in Kiev after last month’s removal of the Moscow-backed government of President Viktor Yanukovych.
“Political pressure is unacceptable, and we are not accepting the price of $500,” he told ministers on Saturday.
“Russia was unable to seize Ukraine by means of military aggression. Now they are implementing plans to seize Ukraine through economic aggression.”
Arseniy Yatsenyuk said the price Russia was demanding was the highest in Europe, and that Ukraine was prepared to continue to buy at the previous rate of $268.50.
Energy minister Yuriy Prodan said that if no deal was reached, Ukraine would take action at an arbitration court in Stockholm.
“We are not trying to break our contract but to set up a fair price,” he said, adding that that Ukrainians should prepare for the possibility of supplies to be cut off.
The price increase could also affect gas supplies to Europe, as 40% of Russian gas to the continent travels through Ukraine.
Yuriy Prodan has said Ukraine would meet its commitments to supply gas to Europe no matter what happened.
Gazprom says Ukraine’s gas debts to Russia stand at just over $1.7 billion.
Ukraine’s interim government has decided to raise gas prices for domestic consumers by 50% in an effort to secure an International Monetary Fund (IMF) aid package.
An official at Ukraine’s Naftogaz state energy company said the price rise would take effect on May 1st, and further rises would be scheduled until 2018.
Ukrainians are accustomed to buying gas at heavily subsidized rates.
But the IMF has made subsidy reform a condition of its deal.
Ukraine currently buys more than half of its natural gas from Russia’s Gazprom, and then sells it on to consumers at below market prices.
Ukraine’s interim government has agreed to raise gas prices for domestic consumers by 50 percent
Yury Kolbushkin, budget and planning director at Naftogaz, told reporters that gas prices for district heating companies would also rise by 40% from July 1st.
IMF negotiators are still in Kiev to negotiate a package of measures worth billions of dollars to help Ukraine’s interim government plug its budget deficit and meet foreign loan repayments.
The IMF is also asking Ukraine to crack down on corruption and end central bank support for the Ukrainian currency.
On Tuesday, Ukraine’s finance minister Oleksandr Shlapak said the country was seeking $15-20 billion from the IMF.
The Financial Times has reported that a rescue package worth about $15 billion is close to being agreed, and could be announced as early as Thursday.
An agreement with the IMF is necessary to unlock further financial support from the EU and US.
Financial help is urgently required as Ukraine has been forced to plunder its foreign currency reserves, and the economy is expected to contract by 3% this year, according to the country’s finance ministry.
In the US, arguments in Congress over reforms to the IMF have held up plans to offer Ukraine $1 billion in loan guarantees.
The EU says its financial support, potentially worth 1.6 billion euros is contingent on the IMF deal being agreed.
Fuel prices have skyrocketed across the US, with a gallon of gas reaching past $5.00 in some parts of the country.
The price of petrol has been continually climbing for the past 32 days, causing many Americans to spend as much as 10% of their income on gas.
Experts are puzzled why prices keep ascending, as many drivers tend to shy away from long trips in the winter months due to slick road conditions.
According to AAA’s Daily Fuel Gauge report, the national average for a gallon of regular gas is $3.73, up two cents from yesterday.
A year ago, the median price was $3.56 per gallon.
The escalating cost of fuel comes as many Americans are facing an end to Bush-era tax cuts and are already coping with smaller paychecks and less disposable income.
KTLA reports that regular fuel costs $5.09 a gallon, while premium can run up to an eye-watering $5.39 a gallon.
With most non-hybrid vehicles getting between 20-30 miles per gallon and most drivers averaging 29 miles a day, the price spike is worrisome, especially since fuel prices tend to rise during the spring and summer months.
Fuel prices have skyrocketed across the US, with a gallon of gas reaching past $5.00 in some parts of the country
The cause of the price hikes is complex – CNN Money reports that it is a “confluence of factors, from rising crude oil prices, to production cuts and refinery closings”.
In addition, consumer reports show that the job and housing markets are slowly but surely creeping back to where they were before the recession, meaning the cost of oil has been rising with it.
North Dakotans have paid the most for fuel, based on their income. According to AAA’s Fuel Gauge Report, the average gas price is $3.67 a gallon.
While it’s not the priciest in the nation, it is a whopping 10.3% of their income.
Prices typically rise in March and April, when car owners begin to travel longer distances.
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