Russia’s Gazprom Sees Worst Loss in Decades as European Gas Sales Collapse

— Kremlin-owned gas giant Gazprom said on Thursday it plunged to a net loss of 629 billion rubles ($6.9 billion) in 2023, its first annual loss in more than 20 years, amid dwindling gas trade with Europe, once its main sales market.

The results highlight the dramatic decline of Gazprom, which since the collapse of the Soviet Union has been one of Russia’s most powerful companies, often used as a leverage to solve disputes with its neighbors, such as Ukraine and Moldova.

Analysts had expected net income of 447 billion rubles, according to Interfax news agency.

According to Reuters analysis, it was Gazprom’s first annual loss since the late 1990s/early 2000s, when Alexei Miller, an ally of President Vladimir Putin, took over the company in 2001.

Gazprom’s 2023 loss followed a net profit of 1.2 trillion rubles in 2022.

The company, now headquartered in St. Petersburg, made heavy losses in the late 1990s after it racked up foreign-currency debt, inflated in ruble terms by the financial crisis of 1998.

Gazprom shares in Moscow were down around 3.3% at 1307 GMT.

Russia’s gas exports to Europe, once its primary export market, have slumped because of the political fallout from the conflict in Ukraine, while Gazprom, which has a monopoly on piping gas abroad, has been the most tangible victim of Western sanctions.

Gazprom has also been engaged in an extensive program of bringing natural gas to local households.

It said on Thursday it made a net loss of 364 billion rubles from sales in 2023, in contrast to a profit of 1.9 trillion rubles in 2022.

Its total revenue fell to 8.5 trillion rubles last year from 11.7 trillion in 2022.

Core profit, or earnings before interest, taxes, depreciation and amortization (EBITDA), dropped to 618.38 billion rubles last year from 2.79 trillion rubles in 2022, according to Reuters calculations.

“The full-year EBITDA of $7.2 billion was the worst in 22 years, since the company reported $7.6 billion in 2002,” said Ronald Smith from Moscow-based brokerage BCS Global Markets.

According to Reuters’ calculations, Gazprom’s natural gas supplies to Europe plummeted 55.6% to 28.3 billion cubic meters in 2023.

Gazprom has not published its own export statistics since the start of 2023.

($1 = 91.6730 rubles)

Source: Trade finance