Russia's Gazprom records worst loss in decades as European gas exports falter

Gazprom, the Russian energy giant majority owned by the Kremlin has recently revealed the worst loss in more than 20 years, of 629bn roubles (€6.38bn) in 2023. This was much worse than the 447bn roubles loss expected by the market, according to the Interfax news agency. It was also sharply at odds with the 1.2tn roubles profit seen in 2022.

Furthermore, the company clocked in a sales net loss of 364bn roubles in 2023, also a disappointment from the 1.9tn roubles profit seen in the previous year. Total revenue also dropped to 8.5tn roubles in 2023, a slide from the 11.7tn seen in the previous year.

These disappointing figures were mostly due to Gazprom’s European exports falling significantly, as a result of Europe’s continuing sanctions on both Gazprom, and several of its individual employees because of the Russia-ukraine war.

This has been an especially hard blow, as prior to the Ukraine war, Europe was the largest export market for both Russia and Gazprom. Gazprom has also not revealed any of its export figures since the beginning of last year.

Why is Gazprom struggling?

Gazprom has long been one of Russia’s most influential companies, with the ability to use its gas supplies as leverage to dictate the course of several regional conflicts, such as those in Moldova and Ukraine.

It also tried doing the same with Europe, as retaliation for the EU sanctions, by choking natural gas supplies through its Nord Stream pipelines. However, this move backfired, as instead of forcing Europe to fold and soften the sanctions, it has accelerated the search for other energy providers for the continent.

This has led Europe to turn more towards other major suppliers, such as the US, North Africa and Qatar, who have offered significant support in helping the continent stock up on natural gas for the winter months. However, a milder than expected winter in 2023 also meant that less energy supplies than previously anticipated were used.

Apart from the decline of European exports, Gazprom is also reeling from natural gas prices stabilising following the RussiaUkraine war, which has significantly slashed the bumper profits several energy companies were seeing in the past couple of years.

Gazprom has also been trying to make up for its dwindling European exports by selling more gas to developing nations such as India and China, which have also been taking advantage of the cheaper energy provided by Russia.

As of now, Gazprom has been hiking its natural gas supplies to China, with the help of a pipeline going through Siberia. However, China also seems reluctant to commit to a new 1,700 mile pipeline with Russia, which could be an additional blow to both the country’s economy and its war chest.

Apart from the decline of European exports, Gazprom is also reeling from natural gas prices stabilising following the Russia-ukraine war