Gazprom Reports Record $6.8 Billion Loss in 2024

Gazprom, Russia's state-controlled gas giant, has reported a staggering net loss of 629 billion rubles ($6.84 billion) for the year 2024, marking its first annual loss since 1999. The company's shares plummeted by as much as 4.4%, the steepest decline in over a year, as concerns mount over its dividend prospects and the impact of restricted gas flows to Europe.

Why this matters: The loss highlights the significant economic consequences of geopolitical tensions and Russia's reliance on the European market, which can have far-reaching implications for the global energy market. This development may also impact Russia's ability to fund its military operations and respond to Western sanctions, potentially altering the balance of power in the region.

The record loss stands in stark contrast toGazprom's net incomeof 1.23 trillion rubles in 2022. Revenue from gas sales fell by a dramatic 40% to 4.88 trillion rubles, as gas flows to Europe, historically Gazprom's biggest market, reached their lowest levels since the early 1970s. The decline in shipments to Europe is largely attributed to the Kremlin's retaliation for Western support of Ukraine following Russia's invasion in 2022.

Plunging gas prices, driven by mild weather, sluggish demand, and brimming inventories, have further compounded Gazprom's financial woes. The Russian government, Gazprom's biggest shareholder, faces mounting pressure on its budget due to rising military spending and the impact of Western sanctions.

Despite expectations of an 18% increase in gas shipments via pipelines to foreign markets this year, reaching 108 billion cubic meters, the loss of the lucrative European market cannot be easily offset. Gazprom Group's investments are planned at 2.57 trillion rubles for 2024, representing a 16% decrease from its plans for the previous year.

While Gazprom's oil business saw a 6.7% increase in revenue to 3.88 trillion rubles last year, and sales at its power utilities business rose by 8.8% to 617 billion rubles, these gains were insufficient to counterbalance the substantial losses incurred in its core gas operations.

Gazprom's record lossin 2024 underscores the far-reaching consequences of geopolitical tensions and the company's heavy reliance on the European market. As the Russian government grapples with the economic fallout of its actions in Ukraine, Gazprom faces an uncertain future, with the potential for further financial setbacks as it navigates the complex landscape of international energy markets.

Key Takeaways

• Gazprom reports $6.84 billion loss in 2024, its first in 24 years.
• Revenue from gas sales falls 40% due to reduced flows to Europe.
• Plunging gas prices and Western sanctions contribute to losses.
• Gazprom's oil and power utilities businesses see revenue increases.
• Loss highlights Russia's economic vulnerability due to geopolitical tensions.