The effects of the sanctions for the invasion of Ukraine are being felt even if gas continues to support Moscow’s finances
THE achievements of Gazprom they are a useful indicator to understand the real effect of the sanctions on Russia for the invasion ofUkraine. In 2022, the Russian gas giant reported a 41.4% decrease in profit compared to the previous year. A net decrease, which corresponds to the drop in supplies to Europe, reduced by 80% at the end of 2022, only minimally offset by the increase that occurred towards East Asia, also due to the infrastructures that do not they are able to support important additional flows compared to the usual ones.
The fact that, in any case, we are talking about 14.2 billion euros (1,226 billion rubles), however, shows how gas, despite the conflict, remains a fundamental source of income for Moscow and how part of the effect of the sanctions is nullified by triangulations which, passing through friendly countries, in any case ensure a considerable export volume.
On the other hand, the significant drop in profit also indicates that the dizzying rise in the price of gas, especially in mid-2022 and up to the peak of 300 euros per megawatt hour at the end of the summer, was not enough to neutralize the effect of the drop in volumes exported.
Gazprom’s results complete the picture already outlined when Moscow released the 2022 accounts of the Russian Federation. According to data released by Russian Finance Minister Anton Siluanov, the budget deficit amounted to 3,300 billion rubles (about 47 billion dollars), or 2.3% of GDP. In 2021, however, the Russian budget had recorded a small surplus.
Looking ahead to what is happening in 2023, there is another element to consider. The fact that Gazprom’s annual report recommends not distributing dividends is a signal that the forecasts for the current year, which have not been disclosed, could discount a further contraction, suggesting that 2022 profits be used as a reserve. And also that the Russian economy is bound to suffer a sharp contraction again this year. (From Fabio Insenga)