In the red for the first time since 1999: Gazprom reports record loss

Red numbers for the first time since 1999
Gazprom reports record loss

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For almost a quarter of a century, Gazprom has delivered reliable profits for its majority owner, the Russian state. In the second year of the war of aggression in Ukraine, it is over. The company is in trouble not only because of the sanctions imposed by its Western customers.

Russian gas giant Gazprom posted record losses last year. The state-owned company reported a net loss of 629 billion rubles (almost 6.4 billion euros) for the second year of Russia’s war of aggression in Ukraine. In 2022, Gazprom said it made a profit of 1.23 trillion rubles (almost 12.5 billion euros). According to Russian media reports, this is the first net loss recorded by Gazprom since 1999. In the years that followed, the group was always profitable and an important source of foreign currency for the Russian state budget.

The loss comes as a surprise to analysts. They had initially predicted that the majority state-owned gas company would also make a profit in 2023 – albeit a significantly smaller one. With the sanctions imposed by Western states as a result of Russia’s war of aggression in Ukraine since February, Gazprom has lost its most important sales markets. In addition, the company’s Nord Stream pipelines – long the main transport route for gas to Europe – were damaged by suspected acts of sabotage in September 2022. For years, Europe was Gazprom’s most important export market.

Since the start of the Ukraine offensive in February 2022 and the subsequent Western sanctions, Gazprom has been seeking new sales markets. However, in order to meet the increased demand in Asian countries, the company needs investments in its infrastructure. In addition, the group, which has the largest natural gas reserves in the world, is struggling with the financial burden of expanding its domestic distribution network.

Moscow particularly wants to increase gas exports to China. Negotiations on the planned expansion of the “Power of Siberia 2” pipeline, which is intended to bring gas from Siberia through the steppes of Mongolia to northern China, had recently stalled.

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