Gazprom falls to first annual loss in 20 years as trade with Europe hit

Results highlight the dramatic decline of Gazprom since Russia launched its full-scale invasion of Ukraine in 2022.

Smoke billows from a fire at oil refinery, owned by Russian oil producer Gazprom Neft, in Moscow, Russia [File: Tatyana Makeyeva/Reuters]

Published On 2 May 2024

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

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

Analysts had expected net income of 447 billion roubles ($4.81bn), according to the 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 roubles (12.9bn) in 2022.

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

Gazprom shares in Moscow were down about 3.3 percent at 13:07 GMT.

Russia’s gas exports to Europe, once its primary export market, have slumped because of the political fallout from the invasion of 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 programme of bringing natural gas to local households.

It said on Thursday it made a net loss of 364 billion roubles ($3.92bn) from sales in 2023, in contrast to a profit of 1.9 trillion roubles ($20.4bn) in 2022.

Its total revenue fell to 8.5 trillion roubles ($91.5bn) last year from 11.7 trillion ($126bn) in 2022.

Core profit, or earnings before interest, taxes, depreciation and amortisation (EBITDA), dropped to 618.38 billion roubles ($6.66bn) last year from 2.79 trillion roubles ($30bn) in 2022, according to Reuters calculations.

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

According to Reuters’s calculations, Gazprom’s natural gas supplies to Europe plummeted 55.6 percent to 28.3 billion cubic metres (bcm) in 2023.

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