“Gazprom plans to lay off 40% of employees: why the company is in crisis

13 January 18:43

Russia’s Gazprom is massively laying off its central office staff: the company plans to fire or transfer 1,600 people. The relevant document was published by 47news, a Russian media outlet, reports Komersant ukrainskyi.

In support of the information, the news portal published a photo of a letter sent to Gazprom CEO Alexei Miller by the corporation’s deputy chairman of the board, Elena Ilyukhina. In it, she says that over the past 20 years, the number of Gazprom’s administration has increased several times, and the payroll is currently 50 billion rubles a year.

She also believes that “the challenges faced by the Gazprom Group require” a reduction in decision-making time, the elimination of duplicate functions and excessive bureaucratic processes, the need to increase the result-orientedness of employees involved in the implementation of key processes for the Gazprom Group, as well as “cost optimization at all levels of management and production processes.”

After the material was published, it was reprinted by leading Russian media. As a result, Sergey Kupriyanov, Head of Gazprom’s Information Policy Department, was forced to comment to Forbes.

“The document is relevant. We have no plans to comment,” Kupriyanov said.

According to The Moscow Times, Gazprom has lost two-thirds of its exports: in 2023, its deliveries to non-CIS countries amounted to only 69 billion cubic meters, the lowest since 1985. And exports to Europe dropped to 28 billion cubic meters, the level of the second half of the 1970s.

In 2024, pumping to Europe increased slightly to 32 bcm per year, according to Reuters, but remained 5.5 times lower than pre-war levels (180 bcm in 2018-19).

The Kremlin’s hopes for China, to which Vladimir Putin offered to increase gas purchases to 100 billion cubic meters per year, proved to be in vain. Xi Jinping never signed a contract for the construction of the Power of Siberia 2 gas pipeline, and the Power of Siberia 1 pipeline, launched in late 2019, compensated the corporation for only a quarter of its previous supplies to the European Union even after reaching full capacity of 38 billion cubic meters per year.

Thus, by the end of 2023, Gazprom suffered its first net loss in a quarter of a century under International Financial Reporting Standards (IFRS), and its amount of RUB 629 billion was a record for the entire period of the company’s existence. In 2024, Gazprom returned to IFRS profit, which amounted to RUB 989 billion in January-September. However, its gas business remained deeply unprofitable.

Мандровська Олександра
Editor