Russia's Gazprom Faces Record Loss As Europe Shuts Market Access

Gazprom reported a net loss of 629 billion rubles ($6.9 billion) for 2023, in stark contrast to its net profit of 1.23 trillion rubles in 2022

Gazprom has been searching for new export markets, but building the necessary infrastructure is both expensive and time-consuming.

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Russian energy giant Gazprom announced on Thursday that it faced a record annual loss last year, largely due to sanctions against Russia following the country's military action in Ukraine, according to AFP news. The state-owned company reported a net loss of 629 billion rubles ($6.9 billion) for 2023, in stark contrast to its net profit of 1.23 trillion rubles in 2022.

The loss highlights the significant impact of Western sanctions on Russia's economy, as the European market — previously Gazprom's primary source of revenue — was nearly closed to its gas exports. In response to the conflict in Ukraine, European countries sought to decrease their dependence on Russian natural gas.

The situation worsened after the September 2022 sabotage of the Nord Stream pipelines, which cut off Gazprom's main transportation route. Gazprom has been searching for new export markets, but building the necessary infrastructure is both expensive and time-consuming.

The company aims to expand its Power of Siberia pipeline to China but has yet to finalise an agreement with Beijing for a second pipeline. Meanwhile, Gazprom also faces the challenge of investing in its domestic distribution network.

In a related development, Indian Oil Corporation (IOC) has resumed purchasing Russian crude oil delivered via a tanker owned by Sovcomflot PJSC, signaling a notable shift in oil trade between Russia and India. The Suezmax tanker Vladimir Tikhonov delivered about 1 million barrels of Russian Urals crude to the Paradip port on Thursday, where IOC operates a refinery, according to Bloomberg ship-tracking data.

This marks the first delivery by a Sovcomflot-owned tanker since last week when SCF Baltica unloaded fuel oil off Sikka in Gujarat. IOC has not yet responded to Bloomberg's request for comment on the matter.