Despite volume dropping by half in 2022, Russia’s state-backed energy giant Gazprom nearly doubled its oil and gas revenue. The company supplied 43% less gas to Europe than in 2021, but prices rose three times on average.
At a time when sanctions were supposed to be crippling the Russian economy, Gazprom saw European export revenue increase from $53 billion to $100 billion.
The Financial Times reports that revenues for the Russian giant are stable, as reduced exports to Europe are balanced by rising prices. Moscow announced last week that it is keeping the Nord Stream 1 gas pipeline to Europe closed until the West removes its sanctions related to the war.
Deliveries are still being made, just not through the Baltic Sea. Instead they are going through Ukraine and Turkey at 84 million cubic meters of gas per day. That’s compared to last year’s 480 million cubic meters per day on average.
In fact, Gazprom earned a staggering $41.75 billion in profit in the first half of this year. This came as Western countries imposed an unprecedented level of sanctions against a major world power after February’s invasion of Ukraine.
These record profits now result in a payment of billions to the Kremlin, which owns 49.3% of the company. The West came together to try to accomplish the exact opposite of this result.
Gazprom profits with lower supply to Europe…earning billions more. Sanctions are not working, except for having Europeans pay more for natural gas, etc.. pic.twitter.com/Onca81GUCD
— EE2184 (@EE2184) September 13, 2022
However, soaring gas prices around the globe more than balanced the slowing of energy exports from Russia, and more have been rerouted to markets in China and India and away from Europe.
Meanwhile, European politicians and consumers nervously wait to see if Russia turns the pipeline supplies of gas back on as the long winter approaches. Gazprom has used several excuses, such as maintenance and difficulties imposed by sanctions, for lowering exports.
Finally it was announced that the tap was closed completely until the West gave up on its sanctions. Energy prices have soared and are expected to go much higher across the continent. The EU has agreed to plans for voluntary rationing, but doubtless more will need to be done.