Russia's gas giant Gazprom on Wednesday reported net profits in 2014 plunged sevenfold over the previous year, weighed down by fallout from the Ukraine crisis and the shrinking value of the ruble.

Gazprom -- which was the most profitable company in the world just a few years ago -- reported 159 billion rubles in net profits last year ($3 billion, 2.8 billion euros), according to its annual report published Wednesday. 

That compared with earnings of 1.14 trillion rubles ($21.8 billion, 20 billion euros at the current exchange rate) in 2013.

Analysts with Morgan Stanley said that the results, if adjusted for impairments beyond the company's control, were "better than expected."

Gazprom explained the 86 percent decline in profits on two main factors: the decreased value of the ruble, and its frictions with Ukrainian gas operator Naftogaz.

The company said its expenses went up by 926 billion rubles ($17.7 billion) because of an "increase in expenses on foreign exchange differences" as the ruble depreciated against the US dollar and the euro.

It was also forced to write off a whopping 34 billion rubles ($650 million) arising from its conflict with Naftogaz, which spiralled after the ouster of Ukraine's Kremlin-backed former president Viktor Yanukovych.

Moscow sharply hiked gas prices for Ukraine after the new pro-Western government came to power in Kiev following mass demonstrations. That increase sparked protests from Ukraine, which refused to pay debts demanded by Gazprom.