Russian stock market awaits decisions on Gazprom and Gazprom Neft dividends
Investors are awaiting the announcement of decisions by the boards of directors of Gazprom and Gazprom Neft on dividends for 2025, which could be the main news of the day. At the same time, analysts assess the probability of payments from Gazprom as close to zero, expecting surprises only from news on Power of Siberia 2.
The market is frozen in anticipation of the verdict from the boards of directors of Gazprom and Gazprom Neft, but the real intrigue lies not in the dividend figure. While minority shareholders wonder if they will get anything, a classic game is playing out between the government and corporate management: the state is implicitly signaling that export superprofits should go to the mega-project Power of Siberia 2, not to shareholder payouts. And Dmitry Peskov's recent statements about reaching an understanding on the "basic parameters" of the gas pipeline with China are not just diplomatic positivity, but the key to deciphering today's board decisions.
The essence: what is really happening
The formal agenda is the approval of dividends for 2025. Gazprom posted 1.34 trillion rubles in IFRS net profit, slightly higher than in 2024. Free cash flow surged from 35 billion to 294 billion rubles, and purely mathematically, the company could pay dividends with double-digit yields. However, the essence is that this profit is largely "paper" — it includes a massive positive revaluation of debt of 430 billion rubles due to the ruble's strengthening. There is no real cash for shareholder payouts: operating cash flow is consumed by the investment program, and debt remains high. The state, controlling over 50% of shares, has already made its choice: dividends for 2025 will be sacrificed for the "construction of the century." This is not management's decision — it is a political directive.
Timeline and context
The history of Gazprom's dividend disappointments dates back to 2021. There were no payouts then due to liquidity extraction via increased MET. In 2022, record dividends with a 26.2% yield followed, but then two years of silence: for 2023 and 2024, shareholders received nothing. Now formal obstacles are fewer: the cancellation of additional MET and improved financial metrics have created a window of opportunity. However, the combination of two factors — the need to finance Power of Siberia 2 and sanctions risks — outweighed. The pipeline's projected capacity is 50 billion cubic meters per year, and its construction will require tens of billions of dollars in investment. It is for this that Gazprom has record-cut its 2026 CAPEX by 515 billion rubles to 1.1 trillion rubles and prioritized debt reduction over dividends. Today's board of directors will merely formalize this choice into a formal recommendation.
Who wins and who loses
Losers are obvious: private minority shareholders of Gazprom who held the stock expecting a resumption of payouts. Free cash flow of 294 billion rubles would have allowed for more than 10 rubles per share, but this money will likely stay in the company. Holders of Gazprom Neft shares also lose: analysts at Freedom Finance Global estimate the final dividend for the second half of 2025 in the range of 17.7–27.7 rubles per share with a yield of 3.5% to 5.3%, with the lower end more likely. Given that the company already paid 17.3 rubles for the first half, the total annual dividend may disappoint those who expected a more generous payout.
Winners include holders of long-term OFZs and floaters, into which capital is flowing from dividend stories that failed to meet expectations. Additionally, an unexpected beneficiary is Gazprom itself as a corporation: retaining funds within the company strengthens its ability to service debt without refinancing on external markets, access to which is closed by sanctions. Indirectly, contractors for Power of Siberia 2 — pipe and construction companies — also win, as they will receive multi-billion dollar orders.
What the media are not saying
The key non-obvious insight concerns the financing mechanism for Power of Siberia 2. Contrary to public statements about the project's commercial nature, the scheme being discussed in the corridors of the Ministry of Finance involves using at least $12 billion from the National Welfare Fund through subordinated deposits at VEB.RF, followed by lending to Gazprom. Under such an architecture, dividend payments to private shareholders would become politically toxic: the state cannot simultaneously pour billions of dollars from reserves and allow profit distribution to minority shareholders. It is this, not formal debt metrics, that blocks payouts. Moreover, on May 20, Peskov stated that "there is an understanding on the basic parameters of Power of Siberia 2," and this statement is synchronized with the date of Gazprom's board of directors not by chance — it serves as a signal to the market: "don't expect dividends, priorities are set."
The second unspoken point: the decision on Gazprom is a litmus test for the entire Russian market. If a state-controlled company with a majority stake refuses payouts for the third consecutive year, it sets a precedent for other state-owned issuers — from Rosseti to Transneft. Investors begin to reassess the entire sector, incorporating a higher discount for the risk of unpredictable dividend policy.
Forecast: next 30 days and 90 days
Over a 30-day horizon, Gazprom shares will remain under pressure. Veles Capital analyst Elena Kozhukhova notes that quotes are near resistance around 125–130 rubles, and breaking through without fundamental optimism will be difficult. If the board of directors, as expected, does not recommend dividends, the stock risks testing support at 116.5 rubles — the annual low. Positivity is only possible if new agreements on Power of Siberia 2 emerge: for example, announcing specific construction start dates or a price formula that is more favorable than market expectations. But Peskov has already stated that "there is no clear understanding of timelines yet," so no short-term growth driver is expected.
Over a 90-day horizon, by the end of August, the dynamics of Gazprom shares will be determined by macroeconomic factors. If the key rate begins to decline from the current 14.5%, the discounted value of the company's future cash flows will rise, supporting quotes even without the dividend factor. However, no easing is expected before September, and the stock will remain in a sideways trend. For Gazprom Neft, the medium-term picture is somewhat better: the company continues to pay dividends, and after the dividend ex-date, shares could recover to a target price of 590 rubles, provided oil prices stabilize.
Editorial forecast
Asset: shares of PJSC Gazprom (ticker GAZP); direction — moderate decline in the next 24–48 hours. The expected board decision not to recommend dividends for 2025 is already partially priced in, but formal confirmation could trigger a sell-off with potential to move toward support at 116.5–118 rubles. The key resistance level is 125 rubles, a break above which is only possible with unexpected positive news on Power of Siberia 2. Confidence level: high. The main risk to the forecast: a sudden announcement of a contract signing with CNPC on terms significantly more favorable than the market expects, capable of instantly reversing quotes upward by 10–15%. This is an editorial opinion, not an investment recommendation.
— Editorial Team
