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Main War — British Intelligence: The war in Ukraine and the worsening of Russia's relations with the West have restricted Gazprom's activities

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British Intelligence: The war in Ukraine and the worsening of Russia's relations with the West have restricted Gazprom's activities

12 May, 2024
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British Intelligence: The war in Ukraine and the worsening of Russia's relations with the West have restricted Gazprom's activities

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Russian invasion of Ukraine and deteriorating relations between Russia and the West have severely limited Gazprom's activities. This was announced by the Ministry of Defence of the United Kingdom, citing intelligence data from the X social network.

According to the summary, the Russian gas monopoly Gazprom suffered its largest annual loss in the last 25 years. Last year, Gazprom's profits fell by approximately 30%, resulting in an annual net loss of about 629 billion rubles ($6.9 million).

"The Russian invasion of Ukraine in 2022, and subsequent degradation of Russia's relationships with the West, has severely constrained Gazprom's operations. Gazprom's failure to fully re-orientate its exports away from its dependence on European markets will likely continue to restrict its profits until at least 2030," intelligence experts believe.

The British defence department noted that although Gazprom was able to redirect some of its trade to alternative markets, these markets are likely to account for only 5% to 10% of lost European sales in 2023.

"It is highly likely that an increase in future sales is reliant on construction of new export infrastructure, such as the 'Power of Siberia 2' gas pipeline," analysts emphasized.

The Ministry of Defence of the United Kingdom stated that the high taxation of Gazprom's profits in 2022 and 2023 has almost certainly reduced the company's ability and incentives to invest in expanding into alternative markets. Last year, Gazprom paid approximately 2.5 trillion rubles ($28 million) to the Russian budget, accounting for about 9% of total state revenues.

"The Russian government plans to further increase the tax burden on Gazprom in 2024, which likely contributed to Gazprom's decision to cut its investment for 2024 by around 15 per cent," concluded the intelligence report.

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