Russian energy company Gazprom said Wednesday its profits for the year ending Dec. 31 were down 86 percent on currency values and charges tied to Ukraine.

Gazprom blamed heavy losses on the appreciation of the U.S. dollar and euro against the ruble, which plummeted in value in part because of the strains of sanctions. Russia's economy relies heavily on oil and natural gas revenue and a weak market for crude oil added another layer of burden.

The Russian Central Bank said last week the currency has stabilized, trading at around 49 rubles per U.S. dollar. The ruble had reached a 62-1 exchange earlier this year.

Outside of the decline in the value of the Russian currency, Gazprom increased impairment charges by $4.7 billion.

"Such an increase includes charge for impairment provision of accounts receivable of Naftogaz Ukraine in the amount of $657 million," the company said in its fiscal report.

Ukraine hosts about 20 percent of the natural gas sent by Russia to the European market. Lingering tensions between Kiev and Moscow have spilled over into the European energy sector, sparking a diversification strategy from members of the European Union.

Gazprom said net sales of gas to Europe increased, but declined by about 9 percent year-on-year in terms of volume.

For net profits, the company posted a 17 percent decline year-on-year to $5.3 billion.

Gazprom is not alone in posting heavy losses as the low price of crude oil takes its toll on energy companies. The loss, however, is especially onerous for a Russian economy teetering on the brink of a major recession.

Russian Prime Minister Dmitry Medvedev in mid-January said the economic situation in the country was "problematic to say the least."