In a surprising turn, Russian energy giant Gazprom announced a staggering loss of 629 billion rubles ($6.84 billion) for the previous year, marking the first time the company has reported a loss since 1999. The news sent shockwaves through the market, causing Gazprom’s shares to plummet by as much as 4.4 percent on Thursday.
The company, which includes Gazprom’s oil business, had been in a profitable position as recently as 2022 when it reported earnings of 1.23 trillion rubles. However, a combination of factors including Russia’s military activities in Ukraine, a significant reduction in gas flows to the West, and a decrease in global natural gas consumption due to unusually warm weather, have all contributed to Gazprom’s current predicament.
The decline in gas production is particularly concerning, with reports indicating that Russia’s gas production levels last year reached their lowest point since the 1970s. This has forced Gazprom to increasingly rely on its oil business to stay afloat.
In response to these challenges, Russia is now looking to redirect its gas supplies to Asia. However, China, one of the key potential markets, is hesitant to become overly dependent on Russian gas, creating further uncertainty for Gazprom’s future.
The company’s losses underscore the broader economic and geopolitical challenges facing Russia, and raise questions about the sustainability of Gazprom’s business model in the face of shifting global dynamics.
(Source: Financial Times | Al Jazeera | Reuters)
