Gazprom shares hit their lowest price in 15 years, capping a disastrous year for a linchpin of Russia’s economy
The logo of Russia’s energy giant Gazprom at a gas station in 2022.
Gazprom’s share price tumbled to a new low on Wednesday, the latest episode in a calamitous year for the Russian state-owned energy juggernaut.
According to Russian outlet RBC, Gazprom’s 106.1-ruble share price on Tuesday represented its lowest value since January 2009. As of Wednesday, the share price had dropped further to 105.75 rubles.
In comparison, just before Russia’s full-scale invasion of Ukraine in February 2022, Gazprom’s share price hovered around 300 rubles.
Analysts speaking to RBC attributed the slide to broader market factors as well as roadblocks in Gazprom’s ability to export gas to Europe, as the continent doubles down on its commitment to end its dependence on Russian energy following Russia’s invasion of Ukraine.
In May, Gazprom posted its first annual loss since 1999, and its share price immediately dropped by 4.4%. It continued to tumble through June, to a then-low of around 113 rubles.
The dreary May report reflected Gazprom’s “loss of a significant share of the European gas market,” Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies, told B-17.
President Vladimir Putin (R) with Gazprom CEO Alexei Miller at the company’s headquarters.
Impact of Russia’s war
Prior to 2022, Europe sourced around 40% of its natural gas from Russia. In June, a Gazprom report seen by the Financial Times said that it would take a decade for the company to recoup losses caused by the war in Ukraine.
Compounding the concerns, an agreement to transit Russian gas via Ukraine is set to end on January 1, 2025.
In September, European Commissioner Kadri Simson said that the EU is “fully committed” to phasing out Russian gas via the Ukraine pipeline. “We started preparing two years ago,” she said.
The move away from Russian gas is not without its headaches for EU countries, and Slovakia is leading efforts from some affected countries to stop this flow running out.
On Monday, following a meeting with Slovakia’s prime minister, Ukrainian Prime Minister Denys Shmyhal reiterated what the country had been signaling for some time: that it has no interest in renewing the deal.
He added, however, that Ukraine is open to the transit of gas from other sources.
Yafimava told B-17 that “the transit question is still hanging in the balance,” but a recent decision by Austrian energy company OMV to cut ties with Gazprom amid a thorny contract dispute has “arguably weakened” its chances of continuing.
OMV’s decision earlier this month was a historic blow to Gazprom, with the company among the first in Western Europe to import and invest in Russian gas during the Soviet era.
Industry experts told B-17 this month that the end of the OMV deal was a significant indicator of Europe’s success in weaning itself off Russian energy, one that would have been unthinkable before the invasion of Ukraine.
Even so, Gazprom’s problems in Europe are not a death knell for the company, Yafimava said.
Gazprom can stay afloat thanks to the large domestic gas market in Russia, she said, adding that the blow had been cushioned by sharply increased gas prices.
Gazprom needs to find new markets “while the cushion lasts,” she added.
One option ahead for it is an agreement over Power of Siberia 2, a Russia-China pipeline that would sharply increase exports to China. “In my view, this will eventually happen,” Yafimava said.
