UPDATE 2-DONG Energy profit hit by lower prices

* Nine-month EBITDA drops to 6.83 billion Danish crowns

* Gas production nearly doubles in Jan-Sept, oil output down

* Sells fibre-optic network to TDC, takes impairment charge

* Full-year earnings outlook unchanged

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COPENHAGEN, Nov 17 (Reuters) - Danish state oil, gas and power group DONG Energy [DONG.UL] reported a 38 percent drop in core profit for the first nine months of the year as weak prices outweighed a jump in gas output.

The company on Tuesday also said it still expects earnings for the full year to be down from 2008, with fourth quarter results seen lagging previous quarters.

"The gas and power markets are still suffering from declining demand and low prices," Chief Executive Anders Eldrup said.

DONG's gas production nearly doubled, to 11 million barrels of oil equivalent in January-September, while oil output fell 11 percent to 6.7 million boe, the company said.

The growth in gas production came mainly from DONG's 10.3 percent stake in the big Ormen Lange gas field off Norway, while the decline in oil was due to a shutdown since August at the Siri field in the Danish sector of the North Sea.

"The first nine months of 2009 were characterised by low demand for gas in northern Europe as a consequence of lower industrial output," the company said in the statement.

DONG also said that it agreed to sell its fibre-optic network to Danish telecom TDC (TDC.CO) for 425 million crowns and booked a 677 million impairment loss on the disposal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to 6.83 billion Danish crowns ($1.37 billion) in January-September from 10.99 billion a year earlier.

"A substantial part of the decrease was due to lower oil and gas prices and effects from timing differences in connection with the huge fluctuations in market prices of oil, gas and coal," DONG Energy said.

The average oil price for the first nine months of 2009 was $57 per barrel, down from $111 in the same period last year, DONG said.

"In spring 2009 a decoupling between oil and gas prices occurred that continued in the second half -- oil prices showed an upward trend, while gas prices showed a downward trend," the company said.

An abundant supply of gas has led to "a very low price level", with the gas price on the Dutch TTF gas hub averaging 13 euros per megawatt hour in the first nine months of the year, down 50 percent from the same period in 2008, DONG said.

The financial crisis has led to declining demand for power throughout 2009, DONG Energy said.

Eldrup told Reuters that electricity demand was down 10 percent from a year ago.

However, DONG's power generation grew 2 percent in the first nine months of the year to 12.7 terawatt hours, as drier weather this year has led to a more normal hydropower supply in the Nordic region, benefiting DONG's output, DONG said.

Average spot prices for Nordic electricity were 35 euros per megawatt hour in the first nine months of 2009, 19 percent lower than in the same period last year, DONG said.

"The EBITDA outlook for 2009 remains unchanged, and EBITDA is still expected to be significantly down on 2008," DONG said, adding that fourth-quarter results would be significantly weaker than results for the previous three quarters.

DONG said it had hedged a large part of its 2009 oil price exposure so deviations from its assumed $74 per barrel price expectation would have only limited effect on financial results.

The company reaffirmed a plan to invest 20 billion crowns in 2009 which it said would lead to cost savings. "However, these are not expected to filter through to the results until 2010."

DONG said it expected to resume production by year-end at the Siri oilfield, which was halted in August because of cracks in a subsea structure. (Reporting by John Acher and Peter Levring, editing by Will Waterman) ($1=4.974 Danish Crown)