Gazprom warns new sanctions could hit EU gas supplies

Mosow: Russia`s energy giant Gazprom warned on Tuesday that new Western sanctions aimed at punishing the Kremlin for its perceived attempts to destabilise Ukraine could both hurt its stock price and leave Europe without crucial gas supplies.

The world`s biggest gas producer admitted that the threat of US sanctions on the Russian energy sector could impact its operations and damage the wider Russian economy -- already dependent on resource exports and in danger of tilting into recession this year. "An expansion of the US, EU and other sanctions programmes could adversely impact operations and financial condition of the Gazprom Group," it said in an annual management report. The state-run firm said its 2013 net profit slipped by seven percent to 1.139 trillion rubles ($32.0 billion, 23.2 billion euros). It also reported a 20-percent decline in sales to ex-Soviet states such as Ukraine. But its fourth-quarter revenues improved by five percent in annual terms and beat analyst forecasts. Economists said the figures had few implications for the stock price of Russia`s largest company because its performance was now inextricably linked to events in Ukraine and the possibility of a mega-deal being struck with China next month that has been under discussion for nearly 15 years. "As of now, the Ukraine issue is crucial for Gazprom`s shares," Moscow`s VTB Capital investment bank said in a research note. Gazprom shares traded flat on the Moscow Exchange despite a one-percent rise in Russia`s ruble-denominated MICEX index.Gazprom -- an offshoot of the Soviet energy ministry long accused of being wielded as a diplomatic weapon against uncooperative neighbouring states -- has been in the news for weeks because of its threat to cut off supplies to Ukraine`s new Western-backed leaders over unpaid debts. Ukraine is a vital transit link for Russian gas that accounts for 13 to 15 percent of EU nations` total gas needs. The ouster of Ukraine`s pro-Kremlin president and the new government`s moves towards the West have prompted Russia to nearly double the price its neighbour must pay for future supplies. Ukraine refuses to pay the higher rate.