Russia's state-owned gas giant may be in serious trouble

The state-owned Russian energy gas giant Gazprom is considering a major reduction in the number of employees working at the company’s headquarters according to reports. 

Business Insider reported Gazprom posted its first losses in 24 years and is considering cutting 40% of its headquarters staff as a way to cut some of the company’s expenses. 

The St. Petersburg-based news outlet 47News first reported the story on January 13th and revealed Gazprom was thinking about cutting its workforce down from 4,100 employees to 2,500. 

Gazprom’s proposed cuts were included in a letter written by a company board member. The letter was dated December 23rd, 2024 according to Business Insider’s reporting. 

The letter’s authenticity was confirmed by the Russian News Agency (TASS) as well as the French news outlet Agence France Presse. Gazprom Deputy Chairman Sergey Kupriyanov also confirmed the letter’s authenticity with Forbes but declined to comment. 

The Deputy Chairperson of the Gazprom Board of Directors Elena Ilyukhina revealed in the letter that the energy giant could save money by reducing its head office employees.  

"The challenges facing the Gazprom group require a reduction in the time required for preparing and taking decisions,” Ilyukhina wrote to Gazprom CEO Alexei Miller according to Business Insider.

Ilyukhina suggested that the energy giant could rely on "automation and digitalization" to replace certain office roles, such as Grazprom's planning and accounting positions. 

The Kyiv Independent noted the letter suggested that Gazprom had been spending 50 million rubles ($480 million) annually on manager salaries. 

It is important to note that the letter appeared to only be referencing employee salaries working at the company’s central office. Gazprom’s workforce is much larger 4,100. 

According to Business Insider, Gazprom said in June 2024 it had 498,000 employees in 2023. Ilyukhina’s letter comes after several recent blows to Russia’s gas industry. 

“Gazprom has suffered massive losses following the collapse of its European gas market, with exports to Europe dropping by more than 80% since 2021,” explained The Kyiv Independent's Tim Zadorozhnyy. 

“Shares of the company fell to their lowest level since January 2009, trading at 106.1 rubles ($1.01) on Dec. 17, representing a 33.5% decline since the start of 2024,” added Zadorozhnyy.

Heavy taxation has also impacted Gazprom according to Zadorozhnyy, who reported the company paid the Russian government $28 million in 2023 and accounted for 9% of Russia’s state revenue. 

“The EU's decision to pivot to alternative gas sources after the full-scale invasion of Ukraine triggered the decline, significantly reducing Europe's reliance on Russian supplies, with the exception of countries like Hungary, Slovakia, and Austria,” Zadorozhnyy explained. 

On January 1st, Ukraine halted Russian gas transit via the Urengoy-Pomary-Uzhgorod pipeline, which will affect Gazprom’s profits. Reuters reported that the end of this export pipeline will cost Gazprom roughly $5 billion dollars in sales. 

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