Gazprom Posts First Annual Loss in 20 Years

 

Gazprom Posts First Annual Loss in 20 Years as Sales to Europe Plummet

Kremlin-owned gas giant Gazprom has reported a net loss of 629 billion rubles ($6.9 billion) in 2023, its first annual loss in more than 20 years. The company's earnings were severely impacted by a significant decline in sales to Europe, which plummeted 55.6% to 28.3 billion cubic meters last year.

The loss is a stark contrast to Gazprom's net profit of 1.2 trillion rubles ($13.1 billion) in 2022, the year Russia launched its full-scale invasion of Ukraine. The company's core profit, or EBITDA, also dropped to 618.38 billion rubles ($6.7 billion) last year from 2.79 trillion rubles ($30.4 billion) in 2022, according to Reuters' calculations.

Gazprom's decline is largely attributed to the political fallout from the conflict in Ukraine, which has led to sweeping Western sanctions and a significant reduction in gas exports to Europe, once its primary export market. The company's natural gas supplies to Europe have slumped dramatically, and it has not published its own export statistics since the start of 2023.

The earnings report highlights the dramatic decline of Gazprom, one of Russia's most powerful companies. The company, now headquartered in St. Petersburg, made heavy losses in the late 1990s after it racked up foreign-currency debt, inflated in ruble terms by the financial crisis of 1998. However, it has not reported an annual loss since the late 1990s or early 2000s, around the time Alexei Miller, an ally of President Vladimir Putin, took over the company in 2001.

Gazprom's decline is a significant blow to Russia's economy, which has been heavily reliant on the company's gas exports. The company's monopoly on piping gas abroad and its oil unit have made it a key player in the global energy market. However, the political fallout from the conflict in Ukraine and the resulting sanctions have severely impacted its operations and earnings.

The company's financial struggles are likely to continue, as Europe seeks to reduce its reliance on Russian gas and diversify its energy sources. The European Commission has announced plans to ensure the bloc plays a leading role in clean tech production, partly in response to the U.S. Inflation Reduction Act, which will provide $369 billion of subsidies for electric vehicles and other green products.

In conclusion, Gazprom's first annual loss in 20 years is a significant blow to Russia's economy and highlights the dramatic decline of one of its most powerful companies. The company's financial struggles are likely to continue, as Europe seeks to reduce its reliance on Russian gas and diversify its energy sources.