Gazprom cancels dividends for the first time since 1998. Shares dive

Gazprom, Russia’s largest gas company, has decided to not pay dividends on its last year’s results. This is the first time that it has not paid out dividends since 1998. Its shares plunged 27%.

“The shareholders decided it was not advisable to pay dividends based on the 2021 results in the current circumstances,” Famil Sadygov, Deputy CEO, stated.

He said that Gazprom would prefer to concentrate on Russian regional gasification and preparation for the heating season, as well as paying higher taxes.

Gazprom shares fell by more than 27% following the decision. It reversed a recommendation of the board to pay a dividend at 52.53 rubles per share, in what would have been its largest payout.

Gazprom intends to spend 526 billion rubles ($10 billion) in 2025 to boost Russia’s gasification, which is currently at 72%.

As part of government social payments, lawmakers are considering imposing a higher tax on mineral extraction.

Gazprom shares are in trouble since the company’s only appeal for investment was high dividends. Tinkoff Investments analysts believe that the decision was partly due to the willingness of the finance ministry to increase…budget revenue.”

Gazprom’s decision is made as the Group of Seven economic power looks to limit the price of Russian oil & gas to stop Moscow from profiting from its actions against Ukraine which have caused a sharp increase in energy prices.

The Russian gas flow to Europe via Ukraine has also fallen.

Gazprom didn’t mention the G7 proposals for limiting gas prices nor the reduction in flows to Europe in its Thursday statement. These are both factors that could have a negative impact on its revenue and tax payments.

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