Gazprom Shares Hit Lowest Level Since 2009 Amid Geopolitical, Market Pressures

By Staff, Agencies

The share price of Russian state-owned energy giant Gazprom dropped to its lowest point in nearly 16 years on Tuesday, following Ukraine's announcement that it will not extend the gas transit agreement with Moscow beyond December 31.

Despite continuing to supply several Central European nations via Ukraine’s gas transmission network, the company’s stock faced significant declines.

Gazprom shares reached a low of 106.1 rubles [$1.02] per share on the Moscow Stock Exchange on Tuesday afternoon before recovering slightly. This marked the lowest share price since January 26, 2009, when shares traded at 101.64 rubles. The decline reflects a broader downward trend on the Moscow Stock Exchange.

Analysts cited a combination of factors contributing to Gazprom’s losses, including reduced profits, geopolitical tensions, suspended dividend payments, and overall market performance.

The company also faced further challenges as Ukraine announced its decision regarding the gas transit contract.

Ukrainian Prime Minister Denis Shmigal confirmed on Monday that the existing agreement with Russia, set to expire on January 1, 2025, will not be renewed.

Following discussions with Slovak Prime Minister Robert Fico, Shmigal emphasized Ukraine’s willingness to negotiate gas transit agreements for non-Russian sources only.

“If the European Commission officially approaches Ukraine about the transit of any gas other than Russian, we are ready to discuss it and reach an appropriate agreement,” Shmigal stated on Telegram.

Gazprom has sought to mitigate declining EU exports by increasing gas deliveries to Asia. However, Ukraine's decision could still further impact its profits. While some EU nations have reduced reliance on Russian gas due to sanctions, others continue to purchase it for its competitive pricing.

Ukraine’s transit network connects to pipeline systems in Moldova, Romania, Poland, Hungary, and Slovakia, and Russia currently supplies around 5% of the EU's gas via Ukraine.

Gazprom, once Russia’s most valuable company, has faced mounting financial difficulties. In May, the company reported a $6.8 billion net loss for 2023, its first annual loss since 1999, driven by dwindling gas exports to Europe. This contrasted sharply with a $13.2 billion profit recorded in 2022.

Gazprom's total revenue fell from $126 billion in 2022 to $92 billion in 2023, and its stock price has dropped approximately 70% since February 2022.