Oleg Davigora20:49, 02.05.24

The drop in gas revenue led to a net loss of 629 billion rubles.

Russia’s state-controlled gas giant Gazprom reported its first annual net loss since 1999 due to reduced supplies to Europe and lower fuel prices.

Gazprom Group, which also includes oil and energy companies, posted a loss of 629 billion rubles ($6.84 billion) last year, compared with a net profit of 1.23 trillion rubles in 2022, writes Bloomberg.

The energy company’s shares fell 4.4%, the sharpest drop in more than a year, amid market concerns about its dividend outlook. Gazprom’s largest shareholder is the Russian government, whose budget is under pressure from rising military spending and Western sanctions.

The net loss came as a result of restrictions on gas supplies to Europe – Gazprom’s historically largest market – against the background of the Kremlin’s corresponding measures for Western support for Ukraine after the Russian invasion in 2022. Meanwhile, falling gas prices amid mild weather, sluggish demand and full inventories contributed to Gazprom’s losses.

Gas revenue fell by 40% to 4.88 trillion rubles, the report said. According to the International Energy Agency, although Gazprom continues to supply pipeline gas to a number of European countries, last year its supplies to Europe fell to the lowest level since the early 1970s.

This year, Russia expects its pipeline gas supplies to foreign markets to increase by 18% this year to 108 billion cubic meters compared to 2023, as the Power of Siberia pipeline to China gradually reaches design capacity. But even though more and more supplies are going to China, it cannot compensate for the loss of the European market.

Last year, the revenue of the group’s oil business increased by 6.7% to 3.88 trillion rubles, and sales of the electricity business increased by 8.8% to 617 billion rubles.

According to the report, the investments of the Gazprom Group this year are planned at the level of 2.57 trillion rubles. This is almost 16% less than the plans for 2023.

Trade in Russian gas

Transit through Ukraine is one of the biggest risks for natural gas supplies to Europe next winter. At the end of 2024, the five-year agreement, which regulates the supply of Russian gas through the territory of the neighboring country, expires.

Although the war between the two countries made it impossible to continue diplomatic agreements, some hopes for the possibility of concluding commercial agreements remained, writes Bloomberg.

Those hopes were dashed at the Flame conference in Amsterdam earlier this week, when a representative of the Ukrainian gas transmission system operator dismissed the possibility of talks between traders over Russian supplies. He stated that the capacity will not be put up for auction.

(C)UNIAN 2024