Gazprom Neft’s NIS Says Net Fell 13% on Prices, Demand

Naftna Industrija Srbije AD, the Serbian oil and gas company controlled by OAO Gazprom Neft (GAZP), said its six-month profit dropped because of cheaper crude and waning demand in Serbia.

Net income fell to 19.1 billion dinars ($221 million) from 22 billion dinars a year earlier, even as NIS increased gas and oil output 4 percent to 817,800 tons of oil equivalent, Chief Executive Officer Kirill Kravchenko told reporters in Belgrade today. Earnings before interest, taxes, depreciation and amortization fell 24 percent to 27.9 billion dinars, he said.

“The main risk to our further investments is not the size of sales or global oil prices, but the debt of our consumers,” which more than doubled to 69.4 billion dinars, he said. NIS’s top three claims are from monopoly Srbijagas JP, flag carrier Jat Airways and chemical company Petrohemija AD, he said.

The Novi Sad, Serbia-based company plans annual investment of 500 million euros through 2015, including in power generation, oil exploration and expansion of its fuel retail in the Balkans.

NIS may not meet its original investment target of 59 billion dinars for 2013, which is now seen between 55 billion dinars and 57 billion dinars, Kravchenko said. Investments rose 40 percent from a year ago to 24 billion dinars in the first half of 2013.

NIS plans to sign up a contractor in September to develop a 200 megawatt gas-fired power plant, worth at least 170 million euros, in Pancevo next to its main refinery.

The company also plans to upgrade a smaller refinery in Novi Sad by early 2016 to produce base oils and lubricants, he said.

To contact the reporter on this story: Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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