Gazprom reported record profits in 2021 thanks to rising commodity prices.
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Russian energy giant Gazprom lost more than a quarter of its market value on Thursday after the state-owned company decided not to pay a dividend.
“Shareholders have decided that in the current situation it is inappropriate to pay a dividend based on the results of 2021,” Famil Sadygov, deputy chairman of Gazprom, said in a statement.
“At the moment, Gazprom is prioritizing the implementation of its investment program, including the expansion of gas infrastructure in the regions of the Russian Federation, and preparations for the upcoming winter period. In addition, we must undoubtedly be ready to meet our payment obligations. .”
The decision, which marks the first time since 1998 that the company has not paid a dividend, reportedly reversed a board recommendation to pay a dividend of 52.53 rubles ($1) per share.
Gazprom’s share price fell 27% before the Moscow Stock Exchange intervened to halt trading.
Gazprom reported record profits in 2021 thanks to rising commodity prices, but a barrage of economic sanctions in the wake of Russia’s attack on Ukraine threatens to cut its revenues.
In recent weeks, reduced Russian gas flows to Europe via the Nord Stream 1 pipeline have fueled fears of a possible shortage of winter supplies.
German energy company Uniper on Tuesday withdrew its 2022 financial outlook related to Gazprom’s supply restrictions, while the German government recently announced it would move to the so-called “alarm level” of its emergency gas plan.
It means that Europe’s largest economy is now at high risk of prolonged gas shortages.
Policymakers in Europe are currently struggling to fill underground storage sites with natural gas deposits to provide households with enough fuel to keep the lights on and homes warm when the cold winter months return.
The EU, which receives about 40% of its gas through Russian pipelines, is rapidly reducing its dependence on Russian hydrocarbons in response to the Kremlin’s months-long attack in Ukraine.