Gazprom Sells Off Assets Following Historic Losses

Written by Henrik Rothen

May.11 - 2024 11:03 AM CET

Gazprom Sells Off Assets Following Historic Losses.

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Russian energy giant Gazprom has started to offload significant real estate properties after recording its first loss in 25 years and the largest in its history.

This development follows a challenging year where the company faced dwindling revenues and mounting debts, exacerbated by huge tensions and reduced gas exports to Europe.

Strategic Asset Liquidation Amidst Financial Turmoil

On Wednesday, Gazprom announced its plans to find buyers for major real estate assets in Moscow and the surrounding areas.

The list includes office buildings on Builders Street, the Imperial Park Hotel & Spa resort complex in the Pervomayskoye settlement, unoccupied spaces on the first floor of a building on Novocheremushkinskaya Street, and a 96-space parking lot near the company's main office in Moscow.

This sale is part of a strategic move coinciding with the completion of Gazprom Group’s relocation to Saint Petersburg.

A Year of Financial Setbacks

In the past year, Gazprom reported a staggering net loss of 629 billion rubles under International Financial Reporting Standards (IFRS), a 27% decline in revenue, and a halving of its EBITDA (earnings before interest, taxes, depreciation, and amortization).

The gas sector, which boasts the largest reserves globally, turned unprofitable with a yearly loss of 1.2 trillion rubles. Furthermore, Gazprom’s debt soared to a record 6.65 trillion rubles, surpassing the liquidity of Russia's National Wealth Fund, which stands at 5 trillion rubles.

The European Market Loss

The Kremlin's strategy of cutting off gas supplies to most European countries in a failed bid to gain concessions over Ukraine significantly impacted Gazprom.

This decision cost the company its principal market, a relationship nearly half a century in the making. By the end of the year, Gazprom’s exports plummeted to just 69 billion cubic meters—the lowest since 1985.

Compared to 2022, this represents a one-third reduction in exports and a threefold decrease from pre-war levels. Exports to Europe dropped to levels last seen in the late 1970s, while production fell to a 34-year low of 404 billion cubic meters.

Gazprom's drastic measures reflect the severe challenges the company faces as it navigates through financial difficulties and changing geopolitical landscapes.

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