Moscow  - Dropping demand and rising business costs slashed profits for Russian natural gas firm Gazprom by nearly 50 per cent in the first half of 2009 when compared to the same period last year, the company reported Monday.

Gazprom reported net profit of 305.8 billion roubles (10.7 billion dollars), down from profits of 609.4 billion roubles in the first half of 2008 - 48-per-cent drop.

Profits dropped because the cost of foreign gas have gone up by 105 per cent, the company said. Gazprom also blamed reduced demand because of the global financial crisis.

Sales also dropped, but not as dramatically, with 1.6 trillion roubles of sales in the first six months of 2009, compared to 1.76 trillion for the same time period in 2008.

The company has reported that demand has been on the upswing in the second half of 2009, reported the Interfax news agency.(dpa)