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Gazprom Records First Annual Loss in 20 Years as Trade with Europe Takes a Hit

Gazprom (Credits: The Guardian)

Gazprom, the Kremlin-owned gas giant, reported a serious setback on Thursday, revealing a net loss of 629 billion rubles ($6.9 billion) for 2023. This marks the company’s first annual loss in over two decades, reflecting a sharp decline in gas trade with Europe, historically its primary market.

The results underscore Gazprom’s dramatic downturn from being one of Russia’s most influential companies since the Soviet Union’s collapse. It has often been instrumental in resolving disputes with neighboring countries like Ukraine and Moldova.

Gazprom (Credits: Offshore Technology)

Analysts, as reported by the Interfax news agency, had anticipated a net income of 447 billion rubles. This marks Gazprom’s first annual loss since the late 1990s or early 2000s when Alexei Miller, a close ally of President Vladimir Putin, assumed leadership in 2001.

Gazprom’s 2023 loss follows a net profit of 1.2 trillion rubles in the previous year. The company faced heavy losses in the late 1990s due to accumulating foreign-currency debt, compounded by the financial crisis of 1998. Gazprom shares in Moscow experienced a decline of approximately 3.3% at 1307 GMT.

The decline in Russia’s gas exports to Europe, attributed to political tensions stemming from the Ukraine conflict, has remarkably impacted Gazprom. The company has been adversely affected by Western sanctions, being the most tangible casualty.

Gazprom has also focused on expanding its natural gas supply to local households. Despite this effort, it reported a net loss of 364 billion rubles from sales in 2023, a stark contrast to the profit of 1.9 trillion rubles in the previous year.

Gazprom (Credits: CNBC)

Revenue dropped from 11.7 trillion rubles in 2022 to 8.5 trillion rubles in 2023. Core profit, as measured by earnings before interest, taxes, depreciation, and amortization (EBITDA), plummeted to 618.38 billion rubles last year from 2.79 trillion rubles in 2022, according to Reuters calculations.

Ronald Smith from the Moscow-based brokerage BCS Global Markets remarked that the full-year EBITDA of $7.2 billion was the lowest in 22 years, since the company reported $7.6 billion in 2002.

Gazprom’s natural gas supplies to Europe saw a staggering decline of 55.6% to 28.3 billion cubic meters (bcm) in 2023, as per Reuters’ calculations. However, Gazprom has not published its own export statistics since the beginning of 2023.

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