May 21, 2024

The Russian government has instructed Gazprom, once Russia’s biggest company by revenue, not to pay out dividends, following record losses and a plummeting share price.

Earlier this month, Gazprom Group, which also includes oil and power businesses, announced a net loss of 629 billion rubles [$6.9 billion] for last year—the first since 1999. A decree on the government website, dated May 18, ordered Gazprom not “to provide for the payment of dividends on ordinary registered shares,” for 2023.

As a majority state-owned multinational and one of the world’s largest publicly listed natural gas companies, Gazprom is a major revenue generator for the Russian economy, but Putin’s invasion of Ukraine has cost it dearly. Europe was Gazprom’s largest sales market until 2022, but the firm restricted gas flows to the continent as the Kremlin retaliated against Western support of Ukraine. Revenues have also been hit by sanctions, decreasing gas prices due to mild weather, sluggish demand and full inventories.

The decree had been agreed by Russia’s energy and finance ministries, as well as the Federal Property Management Agency, and Russian state media reported that it will be discussed at a Gazprom board meeting on Wednesday. Newsweek has contacted Gazprom for comment by email.

On Monday, shares in the majority state-owned multinational energy corporation headquartered in Vladimir Putin‘s home city, St. Petersburg, fell by over 5.5 percent in the biggest slump since October 10, 2022 when blasts ruptured three of four Nord Stream undersea pipelines to Germany.

On Monday, Gazprom’s shares on the Moscow exchange traded at 145.03 rubles [$1.60], marking a year-on-year drop of more than a third (34.03 percent). This is more than 60 percent less than the 367.6 rubles [$4.06] that shares were trading for on October 15, 2021, four months before Putin’s full-scale invasion. As of midday Tuesday, shares had decreased further to 139.94 rubles [$1.53].

Tom O’Donnell, a Berlin-based energy analyst, told Newsweek that Putin had planned before the war to make Europe so dependent on gas that it would not act in solidarity with Ukraine, but this policy had failed.

“Europe resisted with the help of the Americans, the Qataris and others started to bring in LNG [liquefied natural gas] and replace it,” O’Donnell said. “So, as a result, Putin lost the initial energy war with Europe, and Gazprom lost its business.”

It has meant that Putin has to find new markets for its gas, which is sourced from Western Siberia. “Gas in one of the largest gas fields in the world is stranded—you can no longer send that gas to Europe,” added O’Donnell, a fellow at the Wilson Center think tank in Washington, D.C.

Gazprom has not published export statistics since the start of last year, but Reuters said its calculations showed the corporation’s natural-gas supplies to Europe had decreased by 55.6 percent to 28.3 billion cubic meters (bcm) [7.47 trillion gallons] between 2022 and 2023.

Also this month, Gazprom put out to tender some of its property holdings in Moscow and the Moscow region. These included office and nonresidential buildings, and a car parking lot, as well as a spa sanitarium and resort complex.

https://www.newsweek.com/russia-gas-gazprom-putin-stocks-plunge-1902889