Gazprom shares dive as it cancels dividend for first time since 1998

Russian gas giant cites ‘current situation’ in reasoning for decision

Russian gas giant Gazprom has decided not to pay dividends on last year’s results, the first time it will not pay out since 1998, sending its shares plunging 27 per cent.

“The shareholders decided that in the current situation it is not advisable to pay dividends based on the 2021 results,” deputy chief executive Famil Sadygov said.

Gazprom shares plunged by more than 27 per cent on the decision, which reversed a board recommendation to pay a dividend of 52.53 roubles per share in what would have been its biggest payout.

Gazprom plans to spend 526 billion roubles (€9.6bn) by 2025 to increase Russia’s gasification from its current level of 72 per cent.

Lawmakers are also discussing imposing a higher mineral extraction tax on the company as the government boosts social payments.

“This is a disaster for Gazprom shares as the company’s only investment appeal was high dividends. The decision is also likely partly linked to the finance ministry’s willingness to increase ... budget revenue,” Tinkoff Investments analysts said.

Gazprom’s decision comes as the Group of Seven (G7) economic powers looks to cap the price of Russian oil and gas as a way to prevent Moscow profiting from its war in Ukraine, which has led to a sharp rise in energy prices. Russian gas flows to Europe via Ukraine and the Nord Stream 1 pipeline have also fallen.

In its statement on Thursday, Gazprom did not mention either the G7 proposals to cap gas prices or the reduced flows to Europe, both of which threaten to cut its revenue and potentially its tax payments as a result. – Reuters