Russian gas giant Gazprom will pay the Kremlin an £8.6bn dividend after posting record profits after a jump in gas prices triggered by the Russian invasion of Ukraine.
Shares in the company jumped 20 percent on Wednesday after Gazprom said it made a profit of 2.5 trillion rubles (£35.8 billion) in the first half of 2022 compared with a year earlier.
Gazprom’s board recommended a dividend payment to the Russian government, which owns 49.3 percent of the company’s shares, after confirming that its payout base had reached 2.4 trillion rubles.
Famil Sadygov, deputy CEO of Gazprom, said the company achieved record revenues “despite the pressure of sanctions and an unfavorable external environment”.
Gazprom’s exports to Europe have been hit by sanctions, but a jump in wholesale gas prices has helped the company achieve record revenues and profits. The company will now hold a shareholders’ meeting on September 30 to approve the interim dividend.
This was noted by analysts at Capital Economics Putin could reduce gas exports to Europe by 20 percent for up to three years and completely block supply for a year without hurting the Russian economy due to spiraling prices.
Gazprom announced on Wednesday that it has temporarily suspended the flow to Europe through the Nord Stream 1 gas pipeline until September 1 due to maintenance work.
The group has also blocked gas supplies to French group Engie since Thursday after it said it had not received full payment for gas supplied to the energy company in July. French Energy Minister Agnès Pannier-Runacher said the move showed Russia was “using gas as a weapon of war”.
Engie has cut Russian gas deliveries from about 17 percent of annual supplies to about 4 percent as Western countries switch to importing liquefied natural gas through terminals in Britain, the Netherlands and Belgium.
Rising petrol prices and higher oil exports could boost Russia’s energy export revenue by 38 percent to $337.5 billion (£289.6 billion) this year, according to documents seen by Reuters.
Great Britain recently reported on this it did not import energy from Russia first recorded after collapse of trade due to invasion.
The Office for National Statistics said imports from Russia fell by 97 per cent to just £33m in June due to the imposition of sanctions. In the year before the war, the UK imported an average of 499 million pounds of Russian fuel, which has since been replaced by imports from Saudi Arabia, Kuwait, the Netherlands and Belgium.