MOSCOW Russian gas producer Gazprom (GAZP.MM) said on Tuesday its second quarter net profit was up 13 percent to 227.6 billion roubles (3.50 billion pounds) boosted by foreign exchange gains but still short of analysts expectations.
A Reuters poll of analysts had expected Gazprom to post 234 billion roubles in the second quarter net profit, up from 202 billion roubles the same period of last year.
The company, the world's largest gas producer, added that its revenues were up to 1.32 trillion roubles in the second quarter of this year from 1.11 billion roubles a year ago, beating analysts expectations of 1.29 trillion roubles.
Gazprom - in the spotlight due to a pricing dispute with Ukraine after stopping supplies there in June, citing unpaid debts - said it had to set aside 215.8 billion roubles in the first six months of the year due to Ukraine's gas debt.
Andrey Polischuk, an analyst with Raiffeisenbank, said that provisions are "a temporary negative issue". In total, Ukraine owes Gazprom $5.4 billion for gas supplies.
"When the debt is returned it will boost their (Gazprom's) results," Polischuk said. Ukraine, Russia and European Union representatives will meet on Oct 21 trying to resolve gas pricing issue.
Gazprom added that its net debt fell to 894.55 billion roubles in the first six months of the year from 1.11 trillion roubles as of December-end of 2013.
Gazprom group, which also includes its oil wing Gazprom Neft (SIBN.MM), fell under Western sanctions earlier this year for Moscow's role in the Ukraine crisis.
In its report, Gazprom which accounts for a third of Europe's gas needs, said it continues to evaluate sanctions' effect but doesn't think they will have "a significant impact" on its financial situation or operations.
Oil major Royal Dutch Shell (RDSa.L) has earlier suspended development of hard-to-recover oil in Russia's Bazhenov formation with Gazprom Neft (SIBN.MM) due to the sanctions.
(Reporting by Denis Pinchuk and Olesya Astakhova; Writing by Polina Devitt/Katya Golubkova; Editing by Lidia Kelly)