Gazprom sees 50% drop in profits

Gazprom blamed the higher cost on central Asian price rises

Profits at Russian energy giant Gazprom have halved because of the higher cost of buying gas.

Net profit for the first half of the year fell to 305.8bn roubles ($10.6bn, £6.3bn), down from 609.4bn roubles in the first six months of 2008,

The company said the cost of purchased gas from central Asia had increased by 105%, resulting in lower profits.

Other energy companies, such as BP and Royal Dutch Shell, also reported declines in profits last month.

Energy firms have been hit by a decline in oil prices. After hitting a record high of $147 a barrel in July of last year the price of oil fell back to about $30 last December, although it has since rebounded to $79 a barrel.

The value of Gazprom's sales of gas to Europe and other countries increased 6% as higher prices compensated for a drop in export volumes.

The company said the surge in gas costs was "mainly caused by the increase in prices for gas from Central Asia and increase in gas trading activities on the European market and respective increase of gas purchases in Europe".