Gazprom faces major losses as European demand plummets
The Russian gas company faces the risk of losses amounting to approximately £139 billion. The company plans mass layoffs and asset sales to salvage its situation. According to the "Financial Times", gas supplies to Europe and Turkey in 2025 will be over 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 might, is forced to drastically reduce operational costs. As part of a cost-saving programme, the company put several buildings up for sale in February of this year. The Moscow Times portal paints a stark picture, describing Gazprom's gas business situation as "catastrophic".
Reports from the St. Petersburg portal 47news indicate that at the beginning of the year, the company considered laying off as many as 1,600 people from its headquarters. Vice-president Elena Ilyukhina reportedly submitted a request for staff reduction. Gazprom spends approximately £386 million 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 enormous 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 acted as a key transit point. After the Russian invasion of 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 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 of resources from Russia, which before the war satisfied 40% of Europe's needs, fell to just 11% last year.
The prospects for the Russian gas giant are not promising. Over 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 portal 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, which in 2025 is expected to amount to 47 billion cubic metres (1.7 trillion cubic feet), will shrink even 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.
