The government instructs the state-controlled company not to pay dividends for 2023.

Russia’s gas giant Gazprom moves towards postponing several major offshore exploration projects in the Arctic Sea amid record losses and Western sanctions, The Moscow Times quoted an Interfax news agency report citing data from a geological study of subsoil (Interfax has deleted the story later).

In the Kara Sea, where Gazprom holds 11 licenses, exploratory drilling at the Leningradskoye and Obruchevsky sites has been pushed back by four years, from 2029-2031 to 2033-2035, and from 2029-2032 to 2033-2036, respectively. Drilling at the Nevsky site is now scheduled for 2036 instead of 2032, while the Morskoy site has been removed from the plan entirely.

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In the Barents Sea, where Gazprom holds seven licenses, work at the Medvezhyye and Fersmanovsky sites — where the company planned to drill three exploratory wells — has also been postponed by four years, from 2031-2032 to 2035-2036.

The news comes a week after Mongolia demonstratively showed no official plans to permit construction of the gas pipeline Power of Siberia-2 through its territory following China’s decline of a new gas acquisitions contracts with Russia.

This prompted Russian leader Vladimir Putin to fly urgently to Ulaanbataar for talks with the Mongolian government.

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The Arctic zone accounts for over 80% of Russia's natural gas production and an estimated 20% of its crude production, according to the International Energy Agency. Russia planned to sell these volumes to Asian countries, primarily China. The latter, however, only agreed to buy gas from the pipeline Power of Siberia-2 at domestic Russian prices — around $60 per 1,00 cubic meters — making the project financially unviable, according to analysts from the BCS Financial Group.

The decision to postpone Gazprom’s Arctic projects comes on the background of a severe financial deterioration at this state-controlled company. Although Gazprom reported a profit of 1.042 trillion rubles ($11.7 billion) in the first half of 2024, its core gas business remained in the red, with losses totaling 480 billion rubles ($5.4 billion), or 2.5 billion rubles ($288 million) per day, according to Russian Accounting Standards.

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Gazprom’s net loss in 2023 amounted to 629 billion rubles ($6.9 billion) in 2023, its first annual loss in more than 20 years, the Financial Times said. The Russian government this week instructed the company not to pay dividends for the fiscal year 2023, Yahoo Finance reports.

Gas deliveries to Europe, once Gazprom’s largest market, hit their lowest point since the late 1970s as Russian gas exports fell to 69 billion cubic meters, the lowest level since 1985.

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