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Gazprom’s 20-Year Winning Streak Ends with First Annual Loss, Blames Europe Trade

Gazprom (Credits: CNBC)

Gazprom, Russia’s state-owned gas giant, has reported a staggering net loss of 629 billion rubles ($6.9 billion) in 2023, marking its first annual loss in over 20 years. This decline is largely attributed to the dwindling gas trade with Europe, which was once the company’s main sales market.

Gazprom’s financial struggles are a far cry from its heyday, when it was one of Russia’s most powerful and influential companies. Since the collapse of the Soviet Union, Gazprom has been a key player in Russia’s energy sector, often used as a leverage to resolve disputes with neighboring countries such as Ukraine and Moldova.

The company’s financial results for 2023 are a stark contrast to its performance in 2022, when it reported a net profit of 1.2 trillion rubles. The loss of 364 billion rubles from sales in 2023 is also a decline from the profit of 1.9 trillion rubles in 2022. Gazprom’s total revenue has also taken a hit, falling to 8.5 trillion rubles last year from 11.7 trillion in 2022.

Gazprom (Credits: Offshore Technology)

The core profit, or earnings before interest, taxes, depreciation, and amortization (EBITDA), has also seen a decline, dropping to 618.38 billion rubles last year from 2.79 trillion rubles in 2022. According to Ronald Smith from Moscow-based brokerage BCS Global Markets, “The full-year EBITDA of $7.2 billion was the worst in 22 years, since the company reported $7.6 billion in 2002.”

Gazprom’s natural gas supplies to Europe have also plummeted, falling by 55.6% to 28.3 billion cubic meters (bcm) in 2023. The company has not published its own export statistics since the start of 2023, but Reuters calculations reveal the decline in gas exports to Europe.

Gazprom (Credits:

The company’s financial struggles are largely attributed to the political fallout from the conflict in Ukraine, which has led to Western sanctions and a decrease in gas exports to Europe. Gazprom’s monopoly on piping gas abroad has made it the most tangible victim of these sanctions.

Despite its financial struggles, Gazprom has been engaged in an extensive program to bring natural gas to local households. However, the company’s financial results for 2023 paint a bleak picture, and it remains to be seen how Gazprom will recover from this decline.

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