Russia's Gazprom braces for losses as European demand wanes
The Russian gas company is facing potential losses of approximately 257 billion CAD. The company plans mass layoffs and asset sales to improve its financial position. According to the "Financial Times," gas supplies to Europe and Turkey in 2025 will be more than five times lower than in 2019.
According to information obtained by the "Financial Times," Gazprom's expenses will exceed its revenues this year. The Russian company, once a symbol of Russia's energy dominance, is being forced to drastically cut operational costs. As part of a cost-saving program, the company put several buildings up for sale in February. The Moscow Times website describes Gazprom's gas business situation as "catastrophic."
Reports from the St. Petersburg portal "47news" indicate that the company considered, at the beginning of the year, laying off as many as 1,600 employees from its headquarters. Vice-President of the Board Elena Ilyukhina reportedly submitted a request for staff reduction. Gazprom spends approximately 714 million CAD annually on salaries for 4,100 headquarters employees.
Gazprom as a political tool of the Kremlin
The British newspaper recalls that Russian leader Vladimir Putin began tightening control over Gazprom shortly after taking power at the start of the 21st century. The company's significant profits, driven by rising energy prices, were used to finance activities far beyond the energy sector. The company became a key element 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, serving as a tool for exerting pressure on Europe—the primary recipient of Russian gas—and on Ukraine, which served as a key transit point. After the Russian invasion of Ukraine in 2022, the European Union's dependence on Russian resources initially protected Gazprom from severe sanctions.
Europe becomes independent from Russian gas
The situation changed drastically in September 2022 when the Nord Stream undersea pipeline was destroyed. This event accelerated European efforts to end dependence on Russian gas. Imports from Russia, which before the war satisfied 40% of Europe's needs, fell to just 11.2% last year.
The prospects for the Russian gas giant are not optimistic. In the next two years, producers from the USA and Qatar are expected to significantly increase the capacity for exporting liquefied natural gas (LNG). The Moscow Times website assesses that it may turn out that Europe will no longer need Russian gas.
According to forecasts, the volume of gas supplies to Europe and Turkey, expected to amount to 47 billion cubic metres (1.7 trillion cubic feet) in 2025, will shrink further to just 34 billion cubic metres (1.2 trillion cubic feet) by 2034. Such a drastic drop in exports will have catastrophic consequences for the finances of the company, which for years has been one of the pillars of the Russian economy.
