Russia’s gas giant Gazprom has reported a massive drop in its first-half net profit as deliveries to Europe have slumped compared to 2022 when Russia was still supplying pipeline gas to its European customers for most of the first half of last year.
Gazprom’s net profit plunged by 8.5 times to stand at just $3.1 billion (296 billion Russian rubles) for the first half of 2023, down from $26 billion (2.5 trillion rubles) for the same period of 2022.
The collapse in Gazprom’s net profit was also due to the weak ruble, which fell by 24% against the U.S. dollar in the first six months of 2023, Famil Sadygov, deputy CEO at Gazprom, said.
“The decline in exports to Europe was partially offset by an increase in supplies to China, which will continue to grow within contractual obligations, as well as by the efficient operation of the oil business,” Sadygov also noted.
The major drop in Gazprom’s gas deliveries to key customers was due to the halt of Russian pipeline gas exports to nearly all European countries. Weeks after the Russian invasion of Ukraine in early 2022, Russia cut off supply to Poland, Bulgaria, and Finland.
Then Gazprom started to reduce supply via the Nord Stream pipeline to Germany in June 2022, claiming an inability to service gas turbine maintenance outside Russia due to the Western sanctions against Moscow for the invasion of Ukraine.
Gazprom said in early September that Nord Stream would remain shut until “operational defects in the equipment are eliminated,” before the sabotage on the Nord Stream pipelines at the end of September 2022, which definitely closed all pipeline gas routes of Russia’s gas to Germany.
Separately, Gazprom Neft, the oil arm of Gazprom, reported last week a 43% annual slump in its second-quarter net profit amid lower sales.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.