- Russian energy giant Gazprom posted its first annual loss since 1999.
- The West's ban on Russia's energy exports, combined with macro factors, dragged profits.
- The oil company also projected fewer investments for 2024.
Russian energy producer Gazprom Group reported its first annual loss in 24 years, with restricted energy flows to Europe a leading factor in dragging down earnings.
Gazprom, which is majority-owned by the Russian government, saw a net loss of 629 billion rubles, equivalent to about $6.84 billion last year, marking a sharp drop from 1.23 trillion rubles in 2022, according to an earnings report published Thursday and first reported by Bloomberg.
It marks the first annual net loss for the energy giant since 1999, largely due to restricted flows to Europe and lower fuel prices following the West's sanctions over Moscow's war against Ukraine.
The market reacted by sparking a 4.4% drop in the company's share price, the largest decline in more than a year.
Gazprom's report also revealed a 40% drop in gas revenue to 4.88 trillion rubles ($52.6 billion USD). International Energy Agency data indicates that gas flows to Europe hit their lowest levels since the early 1970s.
The financial loss was also driven by broader energy market factors, including plunging gas prices, lackluster demand, and overflowing inventories.
Meanwhile, Gazprom has outlined investments totaling 2.57 trillion rubles for this year, indicating a reduction of nearly 16% compared to its projections for 2023.
Once a booming market for Russia's gas exports, Europe has placed hefty restrictions on the country's energy outflows to the continent since the war in Ukraine started. Russia has managed to reroute much of its energy flows to other countries such as China and India.
Moscow's energy exports — crucial for funding its war in Ukraine — have been curbed, but not as severely as the western countries anticipated.
Despite rising Ukrainian attacks on energy infrastructure, Reuters forecasted Russian oil and gas earnings for the next month to reach 1.292 trillion rubles, equivalent to around $14 billion, a jump from 648 billion rubles, or about $7 billion.