RoydadNaft –  Russia’s state-controlled energy giant Gazprom clawed back from last year’s hefty losses, reporting a net profit of 134.2 billion rubles ($1.72 billion) for the third quarter of 2025—a sharp rebound fueled by government tax cuts, though the figure fell short of analyst forecasts amid lingering fallout from Europe’s energy standoff.

The results, unveiled Friday by the Kremlin-backed behemoth, mark a stark contrast to the 53 billion-ruble net loss in 2024, which stemmed from a one-off windfall tax. Gazprom attributed the Q3 turnaround to eased fiscal pressures, with revenues dipping slightly to 2.18 trillion rubles from 2.4 trillion a year earlier. Over the first nine months of 2025, cumulative net income surged 13% year-over-year to 1.12 trillion rubles, signaling cautious stabilization in a sector battered by geopolitics.

Analysts polled by Interfax had penciled in a rosier 200 billion rubles for the quarter, highlighting persistent headwinds. Since Moscow’s invasion of Ukraine in February 2022, Gazprom has hemorrhaged its once-lucrative European pipeline market—previously accounting for over 40% of sales—pivoting instead to discounted exports to China and domestic consumption. The shift has squeezed margins, even as global LNG demand offers glimmers of hope.

Markets shrugged off the earnings miss, with Gazprom shares climbing 1.13% to 125.46 rubles on the Moscow Exchange by midday trading. The uptick reflects investor relief over the profit positivity, but broader challenges loom: U.S. and EU sanctions continue to throttle technology access for Arctic gas projects, while Russia’s pivot to Asia grapples with infrastructure bottlenecks.

“Gazprom’s recovery is a testament to adaptive fiscal policy, but sustained profitability hinges on diversifying beyond Europe,” said energy analyst Maria Kuznetsova of VTB Capital. The company’s Q3 export volumes to non-EU buyers rose 8%, per preliminary data, yet domestic price caps—intended to shield Russian households—erode upside potential.

As winter demand ramps up, Gazprom faces scrutiny over its Yamal LNG venture and Power of Siberia pipeline expansions, critical to offsetting lost Western revenues. With Russia’s economy increasingly oil- and gas-dependent amid sanctions, Friday’s disclosure underscores the tightrope: tax leniency as a short-term salve, but long-term resilience demands bolder bets on green hydrogen and renewables—fields where Gazprom lags rivals like Norway’s Equinor.

The earnings come against a backdrop of thawing U.S.-Russia energy dialogues under the incoming Trump administration, potentially easing some export curbs. Yet for Gazprom, the real test lies in Q4: Can it convert seasonal spikes into enduring gains, or will analyst skepticism prove prescient?