Russian energy giant Gazprom is looking to cut 1,600 jobs, marking the largest reduction in its history. This move comes as the company faces significant financial pressures due to a steep drop in gas sales in Europe and sanctions affecting its oil operations following the conflict in Ukraine.
CEO Alexei Miller received a letter announcing the proposed job cuts at the headquarters in St. Petersburg, which would see staff numbers reduced from 4,100 to 2,500, a decline of about 40%. This news was initially reported by Russian Telegram channels and later confirmed by the company.
If these cuts go through, it would be a historic move for Gazprom, which has been grappling with severe economic challenges since the onset of Russia’s full-scale invasion of Ukraine. In 2023, the company reported its highest loss in at least 25 years, totaling Rbs629 billion (about $6.9 billion), as its gas sales plummeted, largely due to damage inflicted on the Nord Stream pipeline.
Revenues also fell sharply, dropping nearly 30% year-on-year to Rbs8.5 trillion, with gas sales revenues decreasing from Rbs8.4 trillion to Rbs4.1 trillion. Analysts have noted that these losses highlight Gazprom’s struggle to adjust to a rapid decline in EU gas sales, a market from which it once drew significant profits.
European nations have successfully sought out alternative gas sources, further complicating Gazprom’s situation. While financial conditions have shown some signs of improvement in 2024, experts remain skeptical about the company’s ability to regain its previous profit margins.
The letter detailing the job cuts, written by Gazprom’s deputy chair Elena Ilyukhina, stresses the need for the organization to streamline decision-making, remove redundant roles, and sharpen employee focus on results amid ongoing challenges. A former senior executive at a Russian energy company indicated that the public visibility of the letter suggests serious issues within Gazprom, particularly as many employees seem opposed to the proposed layoffs.
It’s important to note that these job cuts would primarily affect the head office in St. Petersburg and not the numerous branches and subsidiaries located throughout Russia, which together employ hundreds of thousands.