Gazprom, once Russia's biggest earning company, last year made its largest ever cut in natural gas production as the war in Ukraine continues to affect the majority state-owned energy giant.
Until 2023, Gazprom was the largest publicly listed natural gas company in the world, but the engine of Russia's economy has paid a high price due to Vladimir Putin's full-scale invasion of Ukraine, last month posting its first annual loss in a quarter of a century.
Adding to the bad news, Gazprom's annual report released Monday said that it had cut natural gas production by 13 percent to an all-time annual low of 359 billion cubic meters (bcm). This was down from 412.94 bcm the previous year and a third less than the 515 bcm from 2021, in the year before the war.
The gas production figures are the lowest since the company was established by the Ministry of Gas Industry at the end of the Soviet Union in 1989, Reuters reported.
Newsweek reached out to Gazprom for comment.
Moscow has long been accused of using its energy exports as a weapon and Gazprom restricted its flows to its most lucrative European market in what was seen as a way to pressure Kyiv's allies and retaliate against Western sanctions.
But experts say this has backfired as Europe found alternative long-term sources of gas imports. Norway overtook Russia to become the continent's top pipeline gas supplier, while liquefied natural gas (LNG) from the United States and elsewhere has also increased.
Last month, Gazprom Group, which also includes oil and power businesses, posted a net 2023 loss of 629 billion rubles ($7 billion), the first loss in 25 years.
Officially neutral on Putin's invasion, China has greatly increased its trade with Russia over the last two years. But negotiations have reportedly stalled over the price that the Chinese market would get gas from Russia via the proposed Power of Siberia 2 pipeline which the Kremlin hoped would offset losses from the European market.
"European governments have basically decided that they're not coming back and they made certain deliberate steps to switch to alternative suppliers," Vladimir Milov, Russia's former deputy energy minister, told Newsweek.
He said the loss of Gazprom's profitable European markets has hurt Putin's ability to pay for his invasion, although "he still has certain possibilities because the oil industry is doing much better and is still generating profits and taxes for the budget, which is the main source of financing the war now—not Gazprom."
It comes as European officials are looking at how to retain gas supply through the Russia-Ukraine pipeline when its contract with Gazprom expires, Bloomberg reported.
Slovakia and Austria are among European countries that still heavily rely on Russian gas through a pipeline that crosses Ukraine but whose continued supply is uncertain when the transit arrangement finishes at the end of 2024.
Ukraine has refused to renew the deal, but Bloomberg said one option being considered is for European companies to buy and inject gas from Azerbaijan into Russian pipelines heading to Europe.
About the writer
Brendan Cole is a Newsweek Senior News Reporter based in London, UK. His focus is Russia and Ukraine, in particular ... Read more
