Amid a three-day shutdown of Nord Stream 1 gas flows to Germany—and as European energy companies ask for financial assistance from the state to remain solvent—Gazprom, Russia’s state-owned energy giant, has reported record profits in the first half of this year despite the sanctions imposed on it over the Ukraine war.
Gazprom posted a net profit of 2.5 trillion rubles (41.7 billion euros) for the first six months of this year, well over the record-breaking 2.09 trillion rubles (some 27.5 billion euros at the time) that the company netted during the entirety of last year, the Hamburg-based newspaper Der Spiegel Online reports.
The energy company’s record profits, which it managed to earn even though its gas exports to Europe slumped by 35% in the first half of this year, come almost exclusively a result of sky-high gas prices.
“Despite sanctions pressure and an unfavorable external environment, the Gazprom Group reported record IFRS revenues and net profit in the first half of 2022, while reducing net debt and leverage to a minimum,” Famil Sadygov, Gazprom’s deputy chief executive said.
The Kremlin, which owns nearly half (49.3%) of the company’s shares, is set to receive 1.21 trillion rubles (20.1 billion euros), as the board earlier this week proposed 51.03 rubles per ordinary share payout.
News of the massive dividend to be received by the Kremlin undoubtedly comes as a punch in the gut to Western governments, which collectively have taken drastic measures—measures that have crippled their economies and risked their countries’ international standing—in order to inflict as much economic damage as possible upon Moscow. At this point, the effectiveness of the sanctions imposed against Russia remains unclear.
Approximately one month ago, the Chief Executive Leadership Institute, CELI, at Yale University, released a report titled “Business Retreats and Sanctions are Crippling the Russian Economy,” in which the authors claim that Russia has no path out of “economic oblivion.” The report claims, among other things, that Russia’s “domestic production has come to a complete standstill,” and that both its imports and position as a commodities exporter have collapsed since the war in Ukraine began.
Following the publishing of the report, which many liberal press organs immediately presented as ‘evidence’ that Western sanctions are working, The European Conservative’s Sven R. Larson, in a heavy analysis of the report, laid bare its methodological limitations, statistical malpractice, and intellectual trickery.
Larson’s piece, titled “Yale Russia Report Gets an F,” can be read here.
