According to Gazprom's annual report released Wednesday, net profit of the Russian energy company dropped to 159 billion rubles ( 2.8 billion euros, $3 billion) in 2014, sharply down from 1.14 trillion rubles in the previous year.

But revenue grew by 6.4 percent, reaching 5.6 trillion rubles for the year, driven by higher sales to its main European markets which imported 4 percent more gas from the Russian energy company. The Russian behemoth supplies about 30 percent of the 28-nation EU's natural gas.

Gazprom primarily blamed the sharp devaluation of the Russian currency for the profit slump, which had increased expenses by 926 billion rubles. A further 34 billion rubles were shorn off earnings due to a dispute over gas prices with Ukraine's state-owned utility Naftogaz.

Gazprom had stopped deliveries to Ukraine in June 2014, resuming supply only after gas talks with Kyiv led to a new contract at the end of the year. Under the EU-brokered deal, Ukraine now pays $247 per thousand cubic meters of gas, about $100 less than originally demanded by Gazprom. Moscow sharply hiked gas prices for Ukraine after mass demonstration in Kyiv had led to a new pro-Western government.

Clouded outlook

A few years ago, Gazprom was considered the most profitable company in the world. The sevenfold profit decline in 2014 may not be the last dire year for the company.

In its earnings report, Gazprom said it was facing an "adverse economic environment" that may result in a "slowdown of growth in global energy demand with an appreciation of debt capital."

"Lower oil prices make gas prices lower too. Further drop in oil prices or their maintenance at the current level for a long time period would reduce the group's income," it said.

Moreover, the company faces an anti-trust investigation by the European Union, which is accusing Gazprom of abusing its dominant market position on the continent. The company considers the probe as "unsubstantiated."

"Gazprom has implemented a set of measures to develop new infrastructure and bolster demand for gas, as well as strengthen the company's position," Gazprom added in a reference to the EU probe.

uhe/pad (dpa, AFP)