Dividends will not be paid for the first time since 1998. This news triggered a big sell-off and the stock wrote off almost 30%.
Why won’t the dividend be paid?
Famil Sadygov, the vice-chairman of the company’s board of directors, justified the move as follows.
“Shareholders have decided that in the current situation, it is not advisable to pay dividends for 2021.”
He went on to highlight Gazprom’s priorities.
“Currently, Gazprom’s priorities are the implementation of the investment program, including gasification of the regions of the Russian Federation, and preparation for the coming winter.”
How is Gazprom doing?
In times of high commodity prices, that’s usually how these energy companies fare. Even Gazprom reported historically record profits for 2021.
But then Russia attacked Ukraine and there were a lot of Western sanctions, which of course affected Gazprom.
Moreover, the situation for the future is complex and uncertain, because on the one side Europe wants to wean itself off Russian commodities. On the other hand, many countries are still heavily dependent on Russian gas and oil, and it would be difficult for them to find a sufficiently suitable replacement in the near future.
At the same time, many people see Gazprom as a political tool of the Russian government, which can use the company as leverage to advance its interests.
Recently, the company announced a reduction in gas exports to Germany via the Nord Stream 1 pipeline. According to the Russian side, this was merely a delay in repairing the equipment. But German Economy and Climate Protection Minister Robert Habeck have described the whole situation as a politically driven move.
Read also: Australia is experiencing an energy crisis
We will keep you informed about Europe’s moves to diversify its energy commodity suppliers. We, therefore, recommend reading the articles on gas from Africa or Norway.
All efforts are aimed at filling up storage facilities and ensuring stable supplies, especially for the winter period. In the event of any energy shortages in the winter months, Europe could have a serious problem.
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