Gazprom shares drop after canceling its dividend for the first time since 1998

A picture of the logo of Russian energy company Gazprom at a plant in Sofia, Bulgaria, April 27, 2022. REUTERS/Spasiana Sergeeva

MOSCOW (Reuters) – Russian gas giant Gazprom (GAZP.MM) It decided not to pay a dividend on last year’s results, the first time it won’t pay a dividend since 1998, sending its shares down about 30%.

“The shareholders have decided that in the current situation it is not recommended to pay a dividend based on the results of 2021,” said Executive Vice President Famil Sadegov.

He added that Gazprom prefers to focus on the regional gasification of Russia, prepare for the heating season and pay increased taxes.

Gazprom’s shares fell more than 29% due to the decision, which reversed the board’s recommendation to pay a cash dividend of 52.53 rubles per share in what would have been its largest payout.

Gazprom plans to spend 526 billion rubles ($10 billion) by 2025 to increase Russia’s gas conversion from its current level of 72%.

Russian lawmakers on Thursday backed a bill providing for a one-time increase in Gazprom’s monthly mineral extraction tax bill by 416 billion rubles between September and November, or by 1.2 trillion rubles in total, TASS news agency reported, with the government boosting. social payments.

Analysts have criticized the decision to forgo the dividend, one of the few ways Russian retail investors can profit at a time of heavy Western sanctions on Russian companies.

“This is a disaster for Gazprom shares, as the company’s only investment attractiveness was a high dividend payout. It is also likely that the decision is partly related to the Finance Ministry’s willingness to increase … budget revenues,” said analysts at Tinkoff Investments.

Gazprom’s decision comes as the Group of Seven economic nations looks to put an end to the price of Russian oil and gas as a way to prevent Moscow from profiting from its actions in Ukraine, which have led to a sharp rise in energy prices. Read more

The flow of Russian gas to Europe through Ukraine and the Nord Stream 1 pipeline has also decreased.

In its statement on Thursday, Gazprom did not mention G7 proposals to curb gas prices or reduce flows to Europe, both of which threaten to cut its revenue and possibly tax payments as a result.

“The main fear is that minority shareholders may not get anything if the state moves to the continued practice of withdrawing most of (Gazprom’s) profits through tax. It is also a minus for the entire market in 2022,” Finam analysts said.

(1 dollar = 52.5000 rubles)

(Reuters report) Editing by Jason Neely and David Goodman

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