In 2023, Russian gas giant Gazprom reported a net loss of 629 billion rubles, marking its first annual loss in over 20 years. This significant decline in earnings was largely attributed to a decrease in sales to Europe following Russia’s war in Ukraine. Analysts had initially predicted a net income of 447 billion rubles for the company in 2023, but the actual results fell far below expectations. This decline contrasts sharply with Gazprom’s net profit of 1.2 trillion rubles in 2022, which was the year that Russia commenced its full-scale invasion of Ukraine.
The loss experienced by Gazprom in 2023 represents a noteworthy shift for one of Russia’s most powerful companies. This decrease in earnings marks the first annual loss for Gazprom since the late 1990s or early 2000s, coinciding with the tenure of Alexei Miller, an ally of Russian President Vladimir Putin, who took over leadership of the company in 2001. In the late 1990s, Gazprom faced heavy losses due to foreign-currency debt and economic challenges exacerbated by the financial crisis of 1998. The company, now based in St. Petersburg, has a longstanding history of dominance within the gas sector.
Russia’s gas exports to Europe, historically a key market for Gazprom, have declined significantly amid the political repercussions of the conflict in Ukraine. Gazprom holds a monopoly on gas exports and has faced extensive sanctions from Western countries as a result of its involvement in the conflict. The company’s natural gas supplies to Europe fell by 55.6% to 28.3 billion cubic meters in 2023, with Gazprom refraining from publishing its own export statistics for the year. Additionally, the company’s core profit, or EBITDA, saw a sharp decline to 618.38 billion rubles in 2023, down from 2.79 trillion rubles in 2022, marking the lowest EBITDA in 22 years.
The severe financial repercussions faced by Gazprom in 2023 have underscored the impact of geopolitical tensions on the company’s operations and profitability. The political fallout from Russia’s actions in Ukraine, combined with Western sanctions targeting Gazprom, has significantly affected its ability to maintain its position as a dominant player in the global gas market. The company’s financial performance in recent years has been marred by declining sales and profits, challenging its long-standing reputation as a powerful and profitable entity within the energy sector. As Gazprom navigates these turbulent times, it will need to adapt to evolving market dynamics and geopolitical pressures to secure its future sustainability and success.
