Photo from UNIAN National Joint-Stock Company Naftogaz of Ukraine in 2017 received UAH 39.4 billion (US$1.4 billion) in net profit, which was 2.2 times up from 2016. "Naftogaz posted the highest net profit in its 20-year history: UAH 39.4 billion (US$1.4 billion) compared to UAH 17.8 billion in 2016. If not for a positive outcome in the transit case, the group would have suffered a net loss of UAH 7.4 billion," reads the company&#39;s annual report for 2017 along with consolidated financial statements independently audited by Deloitte. Read alsoNaftogaz submits to Stockholm Arbitration another major claim to Gazprom The success in the arbitration against Gazprom was a major factor behind the group&#39;s profit in 2017, the company&#39;s press service said. Last year&#39;s record profits were also possible thanks to an increase in gas production, better conditions for transit growth, efficient debt enforcement, and the newly introduced procurement system. Thanks to more investments, Ukraine&#39;s largest natural gas producer, Ukrgazvydobuvannya, posted record gas production of 15.3 billion cubic meters, the highest in 24 years of operation. Moreover, the enterprise switched to the production of Euro-5 fuels due to modernization of the Shebelynka gas processing plant. As an active participant in the ProZorro procurement system, the group saved UAH 6.9 billion in 2017, with a total of UAH 119.2 billion spent through the system, the Naftogaz&#39;s press service said. The total amount of loans of the group during 2017 decreased by UAH 11.5 billion, or by 16.3%, to UAH 59.3 billion by the end of 2017. Average costs to service Naftogaz debt continued to decline in 2017. The interest rate for loans in hryvnias decreased from 19.0% in 2016 to 17.7% in 2017, while that for loans in U.S. dollars and euros — from 7.8% to 6.7% and from 7.2 to 2.3%, respectively. A system of internal controls was established within the company as well. Read alsoOver UAH 100 mln already recovered from Gazprom – Ukraine&#39;s Justice Minister At the same time, gas production and sales to regional gas supply companies for resale to households yielded only a 3% margin. "Gas production and sales to regional gas supply companies for resale to households under the public service obligations is an important element of the group&#39;s operations. Opaque intermediaries between Naftogaz and households remain the major problem of this line of business. Because of the debt generated by regional supply companies (more than $1 billion over the past two years), the average margin in this segment based on net cash flow in 2016–2017 was a mere 3%," the press service added. As UNIAN reported earlier, at the end of February 2018, the Russian energy monopoly, Gazprom, lost a lawsuit filed by Naftogaz with Stockholm arbitration on a gas transit contract. Gazprom was obliged to pay $4.6 billion to the Ukrainian side. At the same time, taking into account the arbitration award on the gas supply contract, the final amount of settlements between the two companies is $2.6 billion in favor of Naftogaz. Against the backdrop of their loss, Gazprom announced their intention to terminate via court its contracts with Ukraine for the supply and transit of gas. Late in March, Gazprom officially notified Naftogaz of their refusal to comply with the arbitration award. Late in May, Naftogaz began the process of forcing a $2.6 billion debt from Gazprom in foreign courts. The recovery process is under way in England, Switzerland and the Netherlands. Among the assets of interest to the Ukrainian side are the shares of companies operating the Nord Stream 1 and Nord Stream 2 gas pipelines. UNIAN memo. NJSC Naftogaz of Ukraine is the largest state-run vertically integrated oil and gas holding whose subsidiaries account for about 90% of oil and gas production in Ukraine. Naftogaz develops oil and gas fields, produces crude oil and natural gas. Its core business is also transportation and trade in fuel through its own network of filling stations. Ukrgazvydobuvannya is Ukraine&#39;s largest gas producer, holding a 70% share in the total volume of the country&#39;s hydrocarbon production. The company includes four gas industry departments: Shebelynkagazvydobuvannya, Poltavagazvydobuvannya, Kharkivgazvydobuvannya, and Lvivgazvydobuvannya. It is wholly owned by national oil and gas holding Naftogaz of Ukraine.