A former official at Russian energy giant Gazprom says Western sanctions against the company and the Russian economy over President Vladimir Putin’s war in Ukraine have destroyed decades of work, Reuters reports.

After Putin launched a “special military operation” against Ukraine last year, a combination of Western sanctions and Moscow’s decision to cut off natural gas supplies to several European countries, including Germany, have sharply reduced the country’s energy exports.

The latest round of sanctions, which included caps on Russian oil prices, are aimed at hurting Moscow’s oil exports, but Russia finds it easier to find alternative markets for crude and oil products than for natural gas.

Russia’s gas supply to Europe is based on thousands of kilometers of pipelines running from Siberia to Germany and beyond. Until last year, they were an important component of the long-term partnership between Europe and Russia.

What Russian officials say about the situation at Gazprom.

“Of course, the loss of the European market is a very serious test for Russia in terms of gas,” Yuriy Shafranyk, Russia’s energy minister from 1993 to 1996, told Reuters.

The former top manager of Gazprom was even more direct.

“The work of hundreds of people who built the export system for decades has now been washed away,” he told Reuters, asking not to be identified for fear of repercussions.

However, current employees of the company claim that it is business as usual.

“Nothing has changed for us. Last year, our salaries were raised,” a representative of Gazprom told Reuters.

Russian energy company – “a state within a state”

Gazprom was founded in 1989, in the last days of the Soviet Union, by Viktor Chernomyrdin, the former minister of the gas industry.

“Chernomyrdin never allowed anyone to poke their nose into Gazprom. It was a state within a state and to some extent it has remained so to this day,” says Shafranik.

Like many other Russian companies, the energy giant stopped publishing financial results after the start of the war in Ukraine on February 24 last year.

But Reuters estimates, based on export commissions and trading volumes, that Gazprom’s revenue from maritime sales fell to $3.4 billion in January 2023 from $6.3 billion in the same period last year.

These figures, combined with forecasts for the development of exports and prices for natural gas, indicate that this year Gazprom’s export revenues will be reduced by almost half, which will further deepen the deficit of the Russian budget.

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