Russia Increases Domestic Gas Prices Due Loss Of EU Market - British Intelligence

7/15/2024 8:09:09 AM

(MENAFN- UkrinForm) The Russian Regime was forced to raise domestic gas prices due to the loss of exports to the European Union after the start of the war against Ukraine.

That's according to the British Ministry of Defense , referring to an intelligence update, Ukrinform reports.

"From 01 July 2024, Russia implemented an increase in gas domestic gas prices of 11.2%. This hike is almost certainly intended to increase revenue from Russia's domestic market, in response to the loss of Natural gas exports to Europe. This was a consequence of sanctions against Russia for invading Ukraine, as well as Russia intentionally reducing gas supply to Europe in response. In 2023, Gazprom's net annual loss was approximately 629 billion rubles (USD $6.9 billion), its biggest annual loss in 25 years," the report said.

Read also: Czech court hands down first verdict for violating Russia sanctions

The British Ministry of Defense added that Gazprom, one of Russia's state-owned energy companies, is considered a monopolist in the domestic gas supply market, therefore price increases are regulated by the Russian government.

"This doesn't apply to other producers such as Novatek, which account for a smaller market share," the report notes.

Meanwhile, inflation in Russia is highly likely to exceed the central bank's forecast of 4% in the second half of 2024.

"This is partly due to increases in domestic gas prices alongside other rising household bills and increased government spending – which is mainly driven by Russia's rising defence spending on the war in Ukraine. Gas prices for Russian households are estimated to have invreased by nearly 34 per cent since the start of the invasion, despite Russia being the world's largest producer of natural gas in 2023. These are due to rise a further 8.2 per cent in 2025, which will almost certainly add to inflationary pressures in Russia's economy and weaken spending power for ordinary Russians," the British Ministry of Defense concluded.

Read also: Russia's invasion of Ukraine and deterioration of relations with West have limited Gazprom 's activities

As Ukrinform reported earlier, European Economic Commissioner Paolo Gentiloni said Russia transformed its economy and was able to avoid collapse under the pressure of sanctions, but in two to three years the consequences will be severe.

Photo: Thomas Imo/photothek/IMAGO

MENAFN15072024000193011044ID1108439875

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.