The Russian energy giant is considering cutting 40% of its head office staff after posting its first loss in 24 years, according to a letter from one of Gazprom's board members to the company's chief executive.
The letter, first reported by St. Petersburg-based 47News earlier this week, proposes reducing the number of central office employees from 4,100 to 2,500. The letter is dated Dec. 23, 2024.
A Gazprom spokesman confirmed the authenticity of the letter to AFP and Russian state news agency TASS.
In the proposal, Elena Ilyukhina - Deputy Chairwoman of the Board of Directors - noted that the salaries of Gazprom managers have increased many times over the past two decades to about 486.5 million USD/year.
"The challenges facing Gazprom require reducing the time for preparation and decision-making," she said in a letter to Gazprom CEO Alexei Miller.
Gazprom could rely on “automation and digitalization” for positions such as accounting and planning, Ilyukhina said.
47News reported that Ms. Ilyukhina also estimated that cutting 40% of staff would bring Gazprom's management-to-employee ratio on par with Rosatom - Russia's state nuclear energy company.
In June 2024, Gazprom said the company would have 498,000 employees by 2023. Meanwhile, Rosatom's general director told Russian President Vladimir Putin in October of the same year that his company expected to have about 400,000 employees by 2024.
The money saved from the proposed layoffs could be diverted into new performance bonuses for retained employees, Ms. Ilyukhina added.
Gazprom posted its first annual loss in 24 years in May last year. The company announced a net loss of 629 billion rubles, or about $6.84 billion at the time, in 2023. The last time Gazprom reported a net loss was in 1999.
The gas producer continued to face difficulties as its flagship company reported a loss of $3.2 billion in the nine months ended September 2024.
It is unclear whether Gazprom CEO Alexei Miller has accepted Ilyukhina's dismissal proposal. Gazprom declined to comment beyond confirming the authenticity of the letter, TASS reported.
For years, Russia was the main gas supplier to the European Union until the Russia-Ukraine conflict forced Europe to seek ways to wean itself off Russian energy. The transition took years, with the EU having to reduce its share of Russian gas imports from 40% in 2021 to 8% in 2023.
Much of this gap is filled by gas supplies from the US, with US gas imports to the EU soaring from 18.9 billion cubic metres in 2021 to 56.2 billion cubic metres in 2023.
More recently, Ukraine refused to renew its contract to transport Russian gas to Western customers.
