Russian gas titan Gazprom faces $180 billion loss crisis
The Russian gas company is facing potential losses of approximately $180 billion. To mitigate this situation, the company plans mass layoffs and asset sales. According to the "Financial Times," gas supplies to Europe and Turkey in 2025 are expected to be more than five times lower than they were in 2019.
Information obtained by the "Financial Times" indicates that Gazprom's expenses are set to exceed its revenues this year. Once a symbol of Russia's energy prowess, the company is now forced to make drastic cuts to operational costs. As part of a cost-saving program, Gazprom put several buildings up for sale in February. The Moscow Times does not shy away from harsh realities, describing Gazprom's gas business situation as "catastrophic."
Reports from the St. Petersburg portal 47news state that at the beginning of the year, the company considered laying off as many as 1,600 employees from its headquarters. Vice President Elena Ilyukhina reportedly submitted a request for staff reductions. Gazprom spends approximately $500 million annually on salaries for its 4,100 headquarters employees.
Gazprom as a political tool of the Kremlin
The British newspaper reminds us that Russian leader Vladimir Putin began tightening his control over Gazprom shortly after assuming power at the start of the 21st century. The company's enormous profits, fueled by rising energy prices, were used to fund activities far beyond the energy sector. Gazprom has been crucial in consolidating Putin's power in Russia, including through strict control over television stations.
Gazprom also played a significant role in Russia's foreign policy by serving as a means to exert pressure on Europe—the primary recipient of Russian gas—and Ukraine, a key transit point. After Russia invaded Ukraine in 2022, the European Union's dependence on Russian resources initially shielded Gazprom from severe sanctions.
Europe becomes independent from Russian gas
The situation drastically changed in September 2022 when the Nord Stream undersea pipeline was destroyed. This event accelerated European efforts to end their reliance on Russian gas. Imports of Russian resources, which before the war satisfied 40% of Europe's needs, fell to just 11.2% last year.
The outlook for the Russian gas giant is not optimistic. Over the next two years, producers from the USA and Qatar are expected to significantly increase their capacity for exporting liquefied natural gas (LNG). The Moscow Times suggests that it may turn out that Europe will no longer need Russian gas.
According to forecasts, the volume of gas exports to Europe and Turkey, expected to be 47 billion cubic meters (1.7 trillion cubic feet) in 2025, is anticipated to shrink further to just 34 billion cubic meters (1.2 trillion cubic feet) by 2034. Such a drastic drop in exports will have catastrophic consequences for the finances of the company, which has been a pillar of the Russian economy for years.
