Since the beginning of Russia’s war of aggression against Ukraine, Europe has been looking for other natural gas suppliers. Now the Russian Gazprom group is posting a loss of more than six billion euros – its first loss in decades.
The Russian energy company Gazprom fell into the red for the first time in almost a quarter of a century last year as a result of the war of aggression against Ukraine.
The state-owned company reported a net loss of 629 billion rubles (almost 6.4 billion euros) for 2023 on Thursday. After a profit of 1.23 trillion rubles in 2022, Russian analysts had also expected a profit in the following year, albeit a significantly smaller one.
Always profitable in the past
According to Russian media reports, this is the first net loss that Gazprom has recorded since 1999. The company has always been profitable in recent years.
The sudden collapse in business is likely due to the drastically reduced gas deliveries to Europe. The EU states managed unexpectedly quickly to find alternatives to gas supplier Russia. In 2021, European countries still purchased 40 percent of their natural gas from Gazprom. Last year, according to EU figures, it was only 8 percent.
Additionally, the company’s Nord Stream pipelines, long the main transport route for gas to Europe, were damaged by suspected acts of sabotage in September 2022. For years, Europe was Gazprom’s most important sales market.
Looking for new markets
Since the start of the Ukraine war in February 2022 and the subsequent sanctions, Gazprom had tried to open up new sales markets. The company particularly wants to expand its business with Asian countries. However, this requires significant investments in infrastructure.
In addition, the group, which has the largest natural gas reserves in the world, is struggling with the financial burden of expanding its domestic distribution network. Moscow particularly wants to increase exports to China.
Recently, negotiations over the planned expansion of the “Power of Siberia 2” pipeline came to a standstill. The pipeline is intended to transport gas from Siberia through the steppes of Mongolia to northern China.