Gazprom's Struggles: Record Low Production and $7 Billion Loss

Russian energy giant Gazprom Group saw a significant cut in natural gas production to a record low of 359 billion cubic meters in 2023. The company reported a net loss of 629 billion roubles, its first since 1999, due to plummeting gas trade with Europe and ongoing negotiations with China.

Russian energy giant Gazprom Group cut natural gas production by 13% to an all-time annual low of 359 billion cubic metres (bcm) in loss-making 2023 from 412.94 bcm in 2022, the company said in its annual report on Monday. Its natural gas output dwindled by almost a third from 515 bcm in 2021 to the lowest level since the company was set up in the dying days of the Soviet Union in 1989 from the Ministry of Gas Industry.

Kremlin-owned gas giant Gazprom plunged to a net loss of 629 billion roubles ($7 billion) in 2023, its first annual loss since 1999, amid dwindling gas trade with Europe, once its main sales market. Gazprom Group combines company's gas, oil and electric power businesses.

Company's oil and gas output in Russia increased last year by 6.6% to 72.38 million metric tons. Gazprom, unlike oil companies, failed to diversify its sales away from Europe following a major crisis in relations with the West over the conflict in Ukraine.

It has been in painstaking talks with China over more gas sales. However the negotiations have not borne fruit over number of issues, mainly prices. Gazprom has instead turned to the low-cost domestic market, as well neighbouring ex-Soviet countries, such as Kazakhstan, Uzbekistan and Kyrgyzstan, which, according to analysts, would be be able to replace high-cost European markets.