Russian state-owned energy giant Gazprom suffered its biggest annual loss in 25 years in 2023, with revenues falling by around 30% and a net loss of approximately 629 billion roubles (USD $6.9 billion), according to an assessment by British intelligence.

The Gazprom losses are due to measures taken by the European Union to limit consumption of Russian gas and oil following Russia’s invasion of Ukraine. The bloc imposed import bans and tariffs on Russian oil and coal, significantly reduced its dependency on Russian gas, implemented price caps, and accelerated investments in renewable energy to diversify and secure its energy supplies.

The UK intelligence report states that Russia’s invasion of Ukraine in 2022 and the subsequent deterioration of relations with the West “has severely constrained Gazprom’s operations.” It notes that “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.”

While Gazprom has diverted some trade to alternative markets like China, India, and Türkiye, the report estimates these accounted for only 5-10% of lost European sales in 2023. Increasing future sales will likely rely on building new export infrastructure, which the report says is “unlikely to be completed before 2026.”

High taxation has also hampered Gazprom, the assessment finds. In 2023, Gazprom paid an estimated 2.5 trillion rubles (USD $28 billion) to the Russian budget, around 9% of total government revenues. Plans to further increase Gazprom’s tax burden in 2024 “likely contributed to Gazprom’s decision to cut its investment for 2024 by around 15%,” according to the report.

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