Mass Fighting Breaks Out At Giant Russian Gas Field

A massive fight among hundreds of migrant workers from Central Asian states broke out over the weekend at Gazprom’s Kovykta gas field, where thousands of workers are under pressure to build new infrastructure to meet the terms of a natural gas supply contract to China, according to social media platforms. 

As of Monday, indications from Russian social media were that nine workers had so far been hospitalized after the initial fighting broke out on June 23 and then spread throughout the natural gas development complex in Eastern Siberia. 

Thousands of shift workers from the poorer states are building infrastructure at the Kovykta field, which was inaugurated by Russian President Vladimir Putin in December last year, with Gazprom looking to rapidly ramp-up gas output to meet its commitments to China.

Gazprom is under contract to supply China with 38 billion cubic meters per year after 2025, with all that gas to come from Kovykta and Chayanda located 800 kilometers apart and linked to China by the Sila Sibiri 1 pipeline. Gazprom started producing gas from the Kovykta gas condensate field–one of the largest undeveloped natural gas fields in Eastern Russia with estimated reserves of 2 trillion cubic meters of natural gas–only last year

Of Russia’s oil and gas giants, Gazprom has been feeling the bite of Western sanctions most keenly, based on its full-year profit reporting. 

Last month, Gazprom posted a huge drop in its FY 2022 profits as sanctions from Russia’s western customers took a toll. The company’s profits for the year clocked in at 1.226 trillion rubles ($15.4 billion), 41% lower than in 2021 with the company citing a windfall tax imposed by Moscow last year as the reason for the decline. The state controlled company has decided not to pay dividends for the entire year 2022, having previously paid an interim dividend of 1,208 billion rubles ($15 billion) last autumn for the results recorded in the first half of 2022. Gazprom’s Deputy General Director Famil Sadygov has tried to put a positive spin on the bad situation:

“We did not wait for the results for the whole year, but offered the shareholders the opportunity to receive, in advance, a significant amount. Due to this fact, the received dividends have a real value higher than the amount paid at the end of the previous exercise,” he told shareholders.

The weak results have sunk Gazprom’s shares further, bringing 12-month losses to nearly 45%. In contrast, shares of its Russian oil and gas peers have fared better, with Rosneft shares up 25.7% while Novatek has gained 30.9%.

By Alex Kimani for Oilprice.com

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