Russia's Gazprom Has Lost Hundreds Of Billions Of Dollars

Gazprom. © RIA Novosti. Ilya Pitalev

Justin Burke, The Guardian/EurasiaNet: How Russian energy giant Gazprom lost $300bn

Once the state-run conglomerate was expected to become the world’s first trillion-dollar company. Now its market value has plummeted. EurasiaNet investigates how this happened.

t was not too long ago that Gazprom, Russia’s state-controlled energy conglomerate, was one of the Kremlin’s most powerful weapons. But those days now seem like a distant memory. Today, Gazprom is a financial shadow of its former self.

The speed of Gazprom’s decline is breathtaking. At its peak in May 2008, the company’s market capitalisation reached $367bn (£237bn), making it one of world’s most valuable companies, according to a survey compiled by the Financial Times. Only fellow Exxonmobile and PetroChina were worth more. Gazprom’s deputy chair Alexander Medvedev repeatedly predicted that within a decade the Russian energy giant could be worth $1 trillion.

That prediction now seems foolhardy. Since 2008, Gazprom’s value has plummeted. In early August it had a market capitalisation of $51bn – losing more than $300bn. No company among the world’s top 5,000 has suffered a bigger collapse, Bloomberg Business News reported in April 2014, and by the end of the year net income had fallen by an astonishing 86%.

WNU Editor: Gazprom has always been a political weapon used by the Kremlin against the West .... while at the same time it has also being used as a cash cow by the Russian government to finance its budget. Its fall is having an impact on both these areas .... the West is looking at alternative energy supplies and suppliers thereby lessening their dependence on Russian energy supplies, and Gazprom's cash flow problems are causing budgetary problems for the Russian government. Is this a long term problem? .... probably not. The oil and energy industry is known to always excperience boom and bust periods and this one will (with time) past .... but for now .... it is a definite bust for those who are dependent on selling energy for their livelihood.