Reuters forecasts 75% decline in Russia's revenues from gas sales to Europe
Photo: EPA

Russia's revenues from gas sales to Europe this year will be only a quarter of what it earned last year due to a drop in supply volumes and lower prices on the spot market, Reuters writes.

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Gazprom, which sold 170-175 billion cubic meters of gas per year to Europe before the coronavirus pandemic, almost completely lost this market due to the war that Russia unleashed against Ukraine.

In an attempt to blackmail Europe with gas, Russia shut down Nord Stream 1 on August 31, 2022, and a month later it was destroyed by an explosion in the Baltic Sea. One of the lines of Nord Stream 2 was also damaged. Russia was not allowed to launch it because of its aggression.

Since May 2022, Ukraine has stopped gas transit through the Sokhranivka gas metering station due to the Russian occupation of the northern part of Luhansk Oblast, and Russia refuses to transfer these volumes to the Sudzha gas interconnection point.

At the same time, Russia itself refused to transit gas through Poland via the Yamal-Europe pipeline.

All of this has led to the fact that Russian gas exports have plummeted to lows last seen in the Soviet era.

In the first half of 2023, pipeline gas supplies from Russia to Europe decreased to 12.1 billion cubic meters, while for the whole of last year they amounted to 62 billion cubic meters.

The average price for gas to "far abroad" (the term used in Gazprom's reporting) was $830 per thousand cubic meters. This means that supplies to Europe could have brought Gazprom about $52 billion.

This year, according to the forecast of Ronald Smith, an analyst at the BCS financial company, the average price of Russian gas will drop to $445, and exports to Europe and Turkey will fall to 50 billion cubic meters.

If the volume of supplies to Turkey remains at the level of last year – about 22 billion cubic meters, Europe will account for 28 billion cubic meters. In this case, Gazprom's revenue will fall to $12.5 billion.

Gazprom's financial statements for 2022 were poor, despite record high gas prices. Because of this, the company refused to pay dividends.