War in Ukraine: Russian giant Gazprom sees its profits fall by 41% with European sanctions

This can be seen as a success of Europe's economic sanctions against Russia. The Russian state giant Gazprom announced Tuesday a net profit down 41.4% in 2022, to 14.2 billion euros, amputated by the sharp decline in its gas exports to Europe in the wake of the conflict in Ukraine.

The Russian gas giant, a pillar of the Russian economy led by several close to President Vladimir Putin, has indeed been heavily targeted by Western sanctions. The net profit of the Russian gas giant reached in 2022 1,226 billion rubles (14.2 billion euros) against 2,093 billion rubles (24.2 billion euros) the previous year, according to the annual report published Tuesday, cited by Russian news agencies.

According to the group, "the increase in tax payments in the second half of the year had an impact on the amount of profit," it said in a separate statement. In view of these results, Gazprom, a company listed on the Moscow Stock Exchange but controlled by the Russian state with 50.2%, recommended not to pay dividends to its shareholders for 2022.

EU still buys liquefied Russian gas

The year 2022 was marked for Gazprom by the closure of a large part of the European market, except for liquefied natural gas (LNG) that EU countries continue to buy, for lack of real alternative. The stated goal of the Europeans: to strangle Russian revenues related to gas exports to limit the Kremlin's available manna supposed to finance its military offensive in Ukraine.

According to figures shared by the Forum of Gas Exporting Countries, European imports of Russian gas by pipeline rose from 140 billion m3 to 63 billion, a decrease of -55%. Faced with these difficulties, Gazprom, which has a monopoly on Russian gas exports via pipeline, has begun a strategic shift in recent months, redirecting part of its exports to Asia, where energy demand is strong.

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Last year, gas deliveries via the "Force of Siberia" pipeline in the Russian Far East to China reached an all-time high of 15.5 billion cubic meters. At the same time, Russia has increased its sales of liquefied natural gas (LNG).

But experts say it is harder for Russia to redirect its exports for gas than for oil, which is also heavily sanctioned, because the necessary infrastructure (pipeline, factories and LNG carriers for LNG...) is expensive and takes time to build.

For example, Gazprom plans to start construction of a new gas pipeline, "Siberian Force 2024", to northwest China as early as 2. With nearly half a million employees, Gazprom, which holds the world's largest gas reserves, remains one of the engines of Russian growth.