Gazprom, which buys gas from Central Asia and resells it mainly to Europe, said the purchase costs for oil and gas rose 29 percent, but did not elaborate further.

Gazprom also disclosed more details of a sale of shares in Novatek, Russia’s largest non-state gas producer, to Gazprombank that took place in December.

The company said it sold 9.4 percent of Novatek for 57.5 billion roubles, well below the market price at the time.

The price translates into $1.96 billion at the current dollar-rouble rate.

As of the market close on Dec 20, when the sale to Gazprombank was announced, the stake was worth $2.84 billion according to the share price at the time.

“In our view, Gazprom could have struck a better deal by offering shares into the open market (rather than selling to Gazprombank which then sold an option to buy the stake to Novatek’s management),” J P Morgan said in a note.

“In our view, the transaction may well be viewed poorly by Gazprom minority shareholders.”

Novatek Chief Executive Leonid Mikhelson and board member Gennady Timchenko obtained the right to buy the 9.4 percent stake from Dhignfinolhu, a vehicle of Gazprombank.

Gazprom’s third-quarter net profit attributable to shareholders fell 8.9 percent to 159 billion roubles ($5.4 billion), missing expectations for 160 billion seen by a Reuters poll of analysts.

The company said gas sales to Europe, its prime market, decreased to 291 billion roubles from 312 billion in the 2009 period, while operational costs rose 12 percent to 592 billion roubles on the back of increasing oil and gas purchases.

Analysts have long been critical of the company for its inability to curb soaring costs related to gas purchases, capital expenditure and other costs.

“As a result of higher expenses growth, earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 12 percent, quarter on-quarter to 253 billion roubles,” IFC Metropol said in a note.

“We would expect a partial repair in EBITDA margin in the fourth quarter on the back of an increase in gas export prices and oil price growth.”

Total revenues rose to 786 billion roubles from 684 billion in the third quarter 2009.

Net debt as of end-September stood at 972 billion roubles compared with 1.37 trillion as of Dec 31 2009.