“Vladimir Putin played with his energy policy, i.e. gas blackmail in 2022, when he himself began to cut off gas exports to EU countries, and we see the second year in a row that gas exports from Russia are falling by almost 50%.” – IQ said energy expert Petras Katinas from the Energy and Clean Air Research Center (CREA).
This is how he commented on the news that the Russian state-owned gas giant Gazprom announced at the beginning of May that in 2023 experienced 629 billion ruble ($6.9 billion) net loss, the first annual loss in more than 20 years.
– Gazprom announced record losses in at least twenty years. What are the reasons for this? Maybe it is the effect of Western sanctions on Russia?
– First of all, sanctions do not work at all, because Russian gas has basically never been and still is not subject to sanctions.
And what happened was that V. Putin played with his energy policy, i.e. gas blackmail in 2022, when he himself began to cut off gas exports to EU countries, and we see for the second year in a row that gas exports from Russia are decreasing by almost 50% . Let’s compare: 40 percent. of total gas imports to the EU in 2021 consisted of gas from Russia, and in 2023 – only 9 percent Thus, Russian policy led to the fact that Gazprom lost such a large amount of income. The European market has always been a premium market for Russia, that is, where it received the highest profits.
The only way for Gazprom to change the situation is to end the war, to surrender, and then the Europeans would perhaps go back to “business as usual”, ie buying the same amount of gas from Gazprom. But such an option is very questionable.
Now Gazprom has only a few European countries left, and also sells gas to China and Central Asia, but most of the market has been lost to the Russians, and this is their biggest problem. It should also be borne in mind that in 2022 Russia has made probably the biggest profits in its entire history of existence, and Russia’s entire tax policy is tied to European gas prices. This means that the higher the price of gas in Europe, the more taxes Gazprom pays. About a year and a half ago, Russia carried out an even bigger tax reform in this regard.
In addition, after the war, the Russian government imposed a profit tax on Gazprom, the only oil and gas company. In rounded calculations, Gazprom pays more than 50 billion monthly. rubles. The total income from Russian gas and oil, of course, depending on the month, is about 800 billion. rubles. This is the 50 billion. is quite a significant number, especially considering that Gazprom is not making such big profits as it used to be. Therefore, the company calculates losses.
– Will such loss-making tendencies of Gazprom continue?
– This excess profit tax will still be in effect until 2025. and therefore the trends will probably not change. Gazprom needs to find new markets, which is very difficult to do because Europe has been their main market historically. It will be very expensive to build new pipelines now, but it remains to be seen whether other countries will want them as liquefied natural gas (LNG) terminals become more popular.
The only way for Gazprom to change the situation is to end the war, to surrender, and then the Europeans would perhaps go back to “business as usual”, ie buying the same amount of gas from Gazprom. But such an option is very questionable.
Peter Katina.
– But it seems that Gazprom is also building or planning to build LNG terminals?
– Gazprom currently has one LNG terminal in Sakhalin for Asia and one in the Baltic Sea with very low capacity. Gazprom has never been a company focused on LNG terminals. It has always concentrated on its piped gas supply. This has led to a battle between Gazprom and Russian LNG exporter Novotek, especially after seeing LNG take off. So far, Gazprom is not actually implementing any new LNG terminal projects.
– Can the EU’s 14th package of sanctions against Russia, proposed now, be called a prevention for the construction of LNG terminals?
– Yes, basically, it is prevention. The Arctic LNG 2 terminal is already operational, but the US has already applied sanctions to it and, most importantly, applied them to the infrastructure that is supposed to help it export. So it works as it should, but no serious trade takes place. So the European sanctions will not make a big difference. Another terminal – Murmansk – should be completed around 2027. Therefore, the planned EU sanctions will not have much impact on Russia’s income, but in the future it might.
– Can this new package of sanctions be called theoretical-preventive?
– Yes.
– What steps can Russia take to improve Gazprom’s situation? Maybe government subsidies?
– If the aforementioned 50 billion fee, maybe something would change. Gazprom itself is trying to build new pipelines and offer its production to the surrounding countries, but it is not equal to the European market. In the oil sector, Russia subsidizes its refineries so that they do not export oil abroad and leave it for domestic consumption, but in the gas market such an option is not very possible.
Gazprom was ruined by V. Putin’s hands.
– Does Gazprom’s situation affect the world gas market in any way?
– We have already survived all the biggest challenges in 2022. in the summer and we should not feel the negative impact. If Gazprom were to completely cut off supplies again, it would not respond like it did a year and a half to two years ago.
