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Loss of 629 billion rubles ($6.9 billion) in 2023 shows how the Russian president’s invasion of Ukraine devastated the state-owned natural gas monopoly, leading to a sharp decline in sales to Europe, which was its main source of income. Gazprom’s revenues fell by almost 30%. year on year, to 8.5 trillion rubles, and gas sales dropped from 6.5 trillion rubles in 2022 to 3.1 trillion, writes the Financial Times.
After this news, Gazprom shares listed in Moscow fell by over 4.4%. Most Russian analysts expected the company to make little profit.
Gazprom share quotations on the Moscow Stock Exchange | Investing.com
Read also: Big discount for the Chinese. Gazprom is looking for a sales market outside Europe
Analysts said the losses showed that Gazprom, once a cash-rich “national champion” that used its position in European markets as a geopolitical weapon, had failed to adapt to the loss of the European Union market. Moreover, Gazprom did not fare well on other markets either.
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Revenues from gas sales outside Russia fell from 7.3 trillion rubles in 2022 to 2.9 trillion last year, which analysts say is due to a decline in gas sales in non-EU Europe.
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There is an alternative to gas from Russia
Meanwhile, European countries have been more successful than expected in finding alternative sources of gas, says “FT”. According to Eurostat data, Russia’s share in European gas imports dropped from 40 percent. in the last full year before the invasion (2021), up to 8%. in 2023
The results showed that what was once Gazprom’s core business – gas sales to Europe – has become a millstone bringing losses, only partially offset by profits from oil sales, analysts say.
Profits from crude oil, gas condensate and oil derivatives increased to 4.1 trillion rubles, an increase of 4.3 percent, but this much too little for Gazprom to turn a profit.
– The loss of income from Europe is a problem that cannot be solved without returning to Europe – said Craig Kennedy, a Harvard scientist and former vice president of Bank of America.
The Kremlin, trying to avoid liberalization of domestic gas prices, i.e. raising them, is forcing Gazprom to take out loans to cover growing losses. The longer the war lasts, the closer Gazprom is to bankruptcy.
