As economic sanctions were imposed on Russia last week, the state-owned energy company Gazprom, and some of its energy subsidiaries, were listed among those firms facing European Union sanctions. The last time these sort of actions were taken against Russia, during the months-long standoff between Russia and Ukraine in the summer of 2014, Gazprom's exports to Europe dropped by 40 percent and natural gas prices shot up by 60 percent.
The new round of U.S.-imposed sanctions have already taken a toll on Gazprom's earnings.
During a conference call with analysts on Friday, Gazprom deputy chairman Alexander Medvedev said Gazprom was counting on a government decision by December to resolve a pricing dispute with Ukraine, which provides almost half of the company's gas supplies, in exchange for preventing any drastic cuts in supplies to Ukraine.
That will be hard to achieve, as Ukrainians recently voiced opposition to any deal with Gazprom in exchange for partial prices cuts. Russian news agencies reported on Tuesday that negotiations between Russia and Ukraine had broken down. Ukrainian Energy Minister Ostap Semerak told reporters in Kiev that any pricing agreement could only be reached by the end of this year.
Can Gazprom's loss in trade be compensated?
On paper, that's quite possible. Gazprom hasn't lost that much income from the recent sanctions, analysts believe.During an interview with reporters in St. Petersburg on Tuesday, Medvedev said Gazprom is no longer booking payments for gas it provides to Ukraine, arguing that the Ukrainian gas is bound for Europe anyway. A few years ago, Gazprom generated close to half of its revenues from these gas deliveries to Ukraine.
By 2015, however, the volume of the deliveries had dropped to nearly a quarter. The reduction is not a matter of a direct revenue loss to Gazprom, but the ability to book these deliveries as a source of income. The company still benefits from shipping gas in exchange for oil or gas condensates from Russia's Novorossiysk terminal, for instance.
Medvedev added that Gazprom has not started to book payments for gas imported from Central Asia and Iran, but analysts say that any purchase of Central Asian gas from Gazprom would normally be regarded as a supply to the company, in spite of the possibility of resale.
"Gazprom's revenues are unchanged," the state-owned energy company's deputy chairman noted
alternative economies.
Gazprom's loss of revenue from gas deliveries to Ukraine is partly compensated for by higher prices in Europe. The country's state-owned energy company Naftogaz, for instance, charges $268 per thousand cubic meters compared to $230 for Gazprom.
The European Union has offered Russia a 50 percent discount on the price it pays for Russian gas, which has already come into effect. However, Gazprom CEO Alexei Miller said at the St. Petersburg Energy Forum that he saw no chance that the transit route between Russia and Europe would become free, as he stated in May.
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