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Russian energy group Gazprom is considering plans to axe 1,600 jobs — a record number — as the company struggles with plummeting gas sales in Europe and sanctions against its oil arm in the wake of the Ukraine war.
Gazprom chief executive Alexei Miller was notified in a letter about plans to make cuts at the central office workforce in St Petersburg, from 4,100 to 2,500, about 40 per cent, according to Russian Telegram channels and later confirmed by an official company representative.
If implemented, it would mark the largest lay-off in the state-owned gas monopoly’s history as it faces unprecedented economic challenges following Russia’s full-scale invasion of Ukraine, which has ravaged its finances.
The energy group suffered its largest loss in at least 25 years — Rbs629bn ($6.9bn) — in 2023 as gas sales more than halved after explosions damaged the Nord Stream pipeline to Europe.
Revenues fell almost 30 per cent year on year to Rbs8.5tn, with gas sales dropping from Rbs8.4tn to Rbs4.1tn.
Analysts say the losses show how Gazprom, once a cash-rich “national champion” that used its hold over Europe’s energy supply as a geopolitical weapon, had failed to adapt to the crash in sales in the EU market.
European countries have had greater success than expected in finding alternative sources of gas.
Although the company’s finances have improved in 2024, analysts say Gazprom is unlikely to return to its previous profit levels.
The letter to Miller, written by Gazprom deputy chair Elena Ilyukhina on December 23, stated that the “challenges facing the group” required “shortening decision-making timelines, eliminating redundant functions, and enhancing employee focus on results”.
“The letter and the fact that it was leaked to the public clearly show that things are not going well at the company, no matter how much it tries to project an image of stability,” said a former senior manager at a Russian energy company familiar with Gazprom’s situation.
“It’s evident that a significant number of employees are unhappy with the proposal, which is why it ended up in the public domain.”
They emphasise that the cuts apply only to Gazprom’s headquarters in St Petersburg and not branches and subsidiaries across the country, which employ several hundred thousand people.
