Russia’s Gazprom facing challenges as its output falls
Russia's Gazprom is struggling to maintain its dominance in the global energy market, as the company is facing challenges due to production slump following tension with Europe, and rising competition at home.
According to a report by AFP, Russia’s Economy Ministry has predicted Gazprom would produce 414 billion cubic meters of gas during the current year, which will be an all-time low for the public company.
After crisis broke out in Russia’s eastern neighbor, Ukraine, the European Union and the United States accused Moscow of having a hand in the Ukraine crisis, though Russia categorically dismissed such allegations.
The EU and the US then moved to impose economic sanctions against Russia, which have mostly affected the country’s energy sector and have prodded Russia to impose sanctions of its own against European countries.
Following political developments in the past year, market value of Gazprom has also plummeted from USD 300 billion prior to the 2008 financial crisis, to the current figure of USD 50 billion.
"Gazprom is confronted with the greatest challenge in its history," Chris Weafer, a partner at the Macro Advisory consultancy firm, told AFP, adding, "What remains to be seen is whether Gazprom becomes an appendage of the Foreign Ministry or evolves into a global energy company."
According to experts, the loss of the Ukrainian market following tensions between Moscow and Kiev, Europe's energy diversification efforts, and increased competition on the domestic market are major problems with which Gazprom is currently grappling.
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