The proposed layoffs, targeting the company’s headquarters in St. Petersburg, reportedly aim to decrease the number of employees from 4,100 to 2,500.

Europe has historically been Gazprom’s primary market.

In 2023, the company reported a net loss of 629 billion rubles (€6.7 billion), marking its first annual loss since 1999. The downturn is attributed to the halving of gas sales and the impact of sanctions following Russia’s invasion of Ukraine.

The halt of Russian gas supplies through Ukraine as of January 1 has further strained Gazprom’s operations.

The expiration of a five-year transit agreement and Kyiv’s decision not to renew the deal have stopped the flows through Ukraine, compelling Central European countries to seek alternative gas sources.

The proposed Gazprom layoffs, reportedly suggested by the deputy chair of the management board, Yelena Ilyukhina, seek to cut payroll expenses, which currently amount to over 50 billion rubles (€476 million) annually.

In response to its problems, Gazprom has been exploring alternative markets, notably China. However, exports via the Power of Siberia 1 pipeline, operational since late 2019, have compensated only for a fraction of the volumes previously supplied to the European Union.

Negotiations for the construction of the Power of Siberia 2 pipeline have yet to yield a finalized agreement.

The company has not specified a timeline for planned layoffs, and it remains unclear whether CEO Alexei Miller will approve the proposed cuts.