Russian energy giant Gazprom complains of lack of money and demands to raise gas prices for Russians

Gas prices in Russia do not meet Gazprom’s needs for implementing investment projects, stated Aleksei Sakharov, head of Gazprom’s strategic division, during a meeting of the Expert Council under the State Duma, the lower chamber of the Russian parliament.

Source: Russian online newspaper The Moscow Times

Details: Sakharov reported that consumer gas prices must increase to allow Gazprom to continue gasification of the regions and finance necessary capital investments for the development of gas infrastructure.

He noted that the current price levels do not provide adequate funding for these projects, which could impact the reliability of gas supply in the long term.

Sakharov also argued for a threefold increase in transportation tariffs for independent producers. The current rate, frozen since 2015 at RUB 62.5 (US$0.63) per 100 km for 1,000 cubic meters, does not cover Gazprom's costs, which amount to RUB 109 (US$1.09), while the required rate is RUB 170 (US$1.70).

Since the start of the war in Ukraine, the Russian government has already raised gas tariffs for households. Prices increased by 11.2% last year, following a 3% rise in summer and 8.5% in December 2022. In 2025, another increase of 10.2% is planned, bringing the total gas price rise to 37% since the start of the war. For businesses and public utilities, tariffs will rise by 21.3%, generating an additional RUB 33 billion (approximately US$330 millions) in revenue for Gazprom.

Background:

• Gazprom’s shares have fallen to RUB 106 (US$1.06), the lowest level since 2009.
• The company is considering nearly halving the number of employees at its central office, from 4,100 to 2,500.
• In 2023, Gazprom reported a record net loss of US$6.1 billion.

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