(MENAFN) Russian energy giant Gazprom has reported its first annual loss since 1999, marking a significant downturn in its financial performance attributed to declining gas exports and Western sanctions pressure. The state-owned company's earnings report revealed a net loss of 629 billion rubles (USD6.7 billion) in 2023, contrasting sharply with the net profit of USD13.2 billion recorded in the previous year.
The substantial decline in Gazprom's financial metrics is underscored by a notable reduction in total revenue, which fell from USD126 billion in 2022 to USD92 billion in 2023. This decrease was primarily driven by a significant 40 percent drop in revenue from gas sales, amounting to USD47.4 billion, while revenue from the oil business saw a modest 4 percent increase to USD38 billion. Additionally, sales in the power utilities segment experienced a notable uptick of nearly 9 percent, reaching USD6.6 billion.
The release of Gazprom's earnings report triggered a notable market reaction, with the company's shares plunging more than 4 percent following the announcement. The decline in share value reflects investor concerns over the company's financial outlook amidst ongoing geopolitical tensions and economic challenges.
One of the key factors contributing to Gazprom's financial woes is the decline in gas exports to traditional markets in the European Union. Western sanctions related to the Ukraine conflict and incidents targeting the Nord Stream pipelines have significantly curtailed gas shipments to the region. In 2023, Gazprom's natural gas supplies to Europe plummeted by 55.6 percent, reaching their lowest level since the early 1970s, according to estimates by the International Energy Agency.
Despite these challenges, Gazprom has been actively reorienting its energy trade towards the Asian market, with China emerging as a key buyer. The completion of the Power of Siberia pipelines is expected to further bolster gas supplies to China, potentially reaching nearly 100 billion cubic meters annually. Gazprom envisions China as a strategic alternative to the European Union market, aiming to fully substitute European gas purchases with exports to China in the future.
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