No gas supplies to Europe — no money: Gazprom will not pay dividends

Yekaterina Maximova

The Shareholders' Meeting of Gazprom PJSC (53.23% of the shares are controlled by the state) decided not to declare or pay dividends based on the results of the company's activities in 2022. This was officially announced by the gas giant on June 30.

«Earlier, the company allocated 1.2 trillion rubles for the payment of interim dividends for the first half of 2022 — a record amount in the history of Gazprom and the Russian stock market, » Gazprom reminds.

The past year has been epochal for the largest exporter of Russian gas: Gazprom has actually lost the premium European market.

As previously reported by the head of Gazprom PJSC Alexey Miller, by the end of 2022, gas exports to non-CIS countries decreased to 100.9 billion cubic meters against 185.1 billion cubic meters a year earlier. That is, the company lost almost half of its export volumes. This is the lowest export figure since the 90s. And according to ENTSOG, announced in the first quarter of 2023, Gazprom's supplies to EU countries have decreased more than five times over the past year and a half.

In 2023, pipeline gas supplies to Europe are likely to decrease even more significantly and will amount to no more than 50 billion cubic meters. That is, Russia, for which Europe has been a guaranteed market for decades, has lost about 120 billion cubic meters of exports.

The decline in exports also affected production — by the end of 2022, production decreased to 412.6 billion cubic meters against 514.8 billion cubic meters in 2021. This is the lowest figure in the last seven years. But, as Miller noted, this gas is quite enough for Gazprom to «fulfill all its obligations to our consumers within the country and deliver the necessary volumes for export.»

Nevertheless, by the end of 2022, when, among other things, the Nord Streams had not yet been blown up, Gazprom PJSC remained the country's largest taxpayer. The amount of taxes and fees to budgets of all levels amounted to 6.6 trillion rubles, which is almost 12% of the consolidated budget of the Russian Federation.

Thus, the MET alone amounted to 2.9 trillion rubles, including 1.24 trillion rubles, which the company, under pressure from the Ministry of Finance, had to pay in accordance with the recent law on a one-time increase in the MET for Gazprom. Taxes, fees, and dividends accounted for almost 50% of the gas giant's gross revenue.

As for the financial results of PJSC Gazprom, according to the results of last year, so far, taking into account the high base of the first half of 2022, the hyped demand for gas and high prices, they turned out to be impressive.

Thus, the company's revenue exceeded 11.7 trillion rubles (+14%), the result of a prosperous 2021, we recall, 10.2 trillion rubles. But Gazprom's net profit under IFRS fell by 41,4% to 1.3 trillion rubles (2.16 trillion in 2021).

At the same time, the company ended the first half of the year with a profit of 2.5 trillion rubles, in the second half of the year Gazprom already received a record loss of 1.2 trillion rubles. That is, an unscheduled increase in the mineral extraction tax for the giant «ate» Gazprom's profit. As well as the final dividends at the end of last year.

As of the end of 2022, Gazprom's market capitalization has also «collapsed»: from $ 108.6 billion to $ 74 billion. And back in 2008, Alexey Miller at the European Business Congress stated that it would take the company seven to eight years to bring the capitalization of the Russian giant to a trillion dollars.

Gazprom's prospects for 2023 have repeatedly been called «alarming» or «frightening» by experts, since the European market (non-CIS countries) formed about 73% of the giant's revenue structure.

And as Alexey Belogoryev, Director of Research at the Institute of Energy and Finance, previously told Novye Izvestia in an interview, Gazprom will cease to be the «cash cow», the super-rich company to which we are accustomed.

«There will be no such margin, the usual excess profit. There will simply be such a state-owned company with moderate profitability. Moreover, the main source of profit will come from the domestic market. The main risk here for consumers in Russia, because in such conditions, lobbying for higher gas prices is increasing», — Belogoryev predicted.

Analysts of BCS Express called the decision to refuse to pay final dividends expected. «In mid-May, Gazprom's board of directors recommended not to pay final dividends for 2022. Prior to that, Gazprom paid its shareholders record dividends for the first half of 2022 in the amount of 51.03 rubles per share. Despite the fact that the annual dividends were a record for all time, the zero final payments disappointed investors very much, » BCS Express summed up.

Over the past few years, Gazprom has not paid dividends only by the end of 2021. Gazprom's Deputy chairman of the Management Board, Famil Sadygov, then said that payments were impractical, and the company's priorities were the implementation of an investment program, including gasification of the regions of the Russian Federation, and preparation for the upcoming winter.

Recall that Gazprom has allocated 297.1 billion rubles for the payment of dividends for 2020, in 2018 and 2019 — 393.2 and 360.8 billion rubles, respectively. In the period from 2013 to 2017, Gazprom annually allocated only about 170-190 billion rubles for dividends.