Russia’s Gazprom in ‘grim’ state from Ukraine war

Good morning. We have an exclusive story today on Gazprom, with new research warning the Russian energy giant may fail to recover gas sales lost as a result of the war in Ukraine for at least a decade.

The company’s exports to Europe will average 50bn-75bn cubic metres a year by 2035, barely a third of prewar levels, according to a report commissioned for the company’s leaders.

Although Gazprom is hoping that a new pipeline to China can help make up for lost European export volumes, its capacity will only be 50 bcm a year and prices in the Asian nation are much lower than in Europe, the report said, while a deal over its construction has yet to be reached.

The new research is among the most candid acknowledgments yet of how the western sanctions imposed in response to Vladimir Putin’s war have damaged Gazprom and the wider Russian energy sector.

“It’s very grim,” said Elina Ribakova, a non-resident senior fellow at the Washington-based Peterson Institute for International Economics, after reading the research. “Gazprom is at a dead end, and they’re very much aware of it.”

Here are more details from the 151-page report.

• War in Ukraine: Russia has knocked out or captured more than half of Ukraine’s power generation, spurring rolling blackouts nationwide and heightening fears about the future of energy supplies.

• EU politics: The biggest division for Europe’s nationalist parties used to be Russia. But the lines are becoming blurred as the bloc’s parliamentary elections loom, writes Ben Hall.

How will this week’s elections change the EU? Join us at our subscriber-exclusive webinar next Wednesday and put your questions to FT journalists.

Putin is expected to speak later in the week at the St Petersburg International Economic Forum, which opens today. Here’s what else I’m keeping tabs on:

• Economic data: France, Germany, Italy, Russia, UK and US issue services purchasing managers’ indices, while the Bank of England releases data on the UK’s holdings of international reserves.

• Companies: Dubai-based Sidara faces a deadline to make a firm bid for John Wood Group, after the engineering company rejected its three previous offers. B&M, Zara owner Inditex, Lululemon Athletica and Workspace Group have results, while WHSmith publishes a trading statement.

• UK: Banknotes featuring a portrait of King Charles III enter circulation today.

Five more top stories

1. Rishi Sunak was deemed to have narrowly edged the first live television debate with his Labour opponent Sir Keir Starmer yesterday evening, dominated by the issues of tax and immigration. The prime minister, the Conservative underdog in the UK election, won the night by a margin of 51-49 according to a snap YouGov poll. Here’s how last night’s fractious, hour-long debate went down.

• TikTok battleground: Labour is beating the Tories on the social media platform, achieving more than twice as many plays of its videos since both parties launched official accounts.

• More Labour: Former Tory donor John Caudwell told the FT he would be open to bankrolling the opposition party in future if Starmer is willing to take bold decisions to boost the economy.

2. Exclusive: The head of De Beers aims to transform the diamond miner into a leading luxury jewellery retailer as it reels from its worst year in more than two decades. Although the company sells diamond jewellery in retail stores globally through its boutiques, chief executive Al Cook told the FT he is planning to double the number of outlets to push into the territory of profitable luxury brands Tiffany and Cartier. Here’s more on Cook’s plan to create a mining-to-retail operation.

3. Joe Biden has accused Benjamin Netanyahu of prolonging the war in Gaza, saying “there is every reason” for people to conclude that Israel’s prime minister was doing so to remain in power. The US president’s comments will increase pressure on Netanyahu to defy the far-right critics in his coalition and support Biden’s plan to end the Israel-Hamas war.

• Israeli hostages: Demands from families to bring the hostages home have been given renewed urgency after Israel’s military confirmed four more captives held by Hamas had died.

• Netanyahu’s choice: Biden’s proposal will save hostages and Israel’s long-term interest, writes Kim Ghattas, and is the final way out of the dark tunnel of war.

4. The European Central Bank’s expected rate cut tomorrow will give the region an economic boost that is sorely needed, analysts say. The scale of the impetus will depend on how much further borrowing costs fall, but stubbornly high inflation driven by rapid wage growth could limit the number of rate cuts, said experts. Here’s what you need to know ahead of tomorrow’s rate decision.

5. Turkey’s top court has ruled Recep Tayyip Erdoğan’s right to fire central bankers unconstitutional, striking down part of a decree he signed. The president has used the sweeping executive order to sack central bank governors five times in as many years, as he sought to tighten control over the economy. Here’s more on the rare challenge to Erdoğan’s authority.

The Big Read

The series of new tariffs issued by the US and Europe against Chinese electric vehicles is forcing China’s leading carmakers to sharpen their focus elsewhere. But the inadvertent result of this rising protectionism could lead to Chinese dominance in not just the remaining western economies that are less protectionist, but across the world’s most important emerging markets such as south-east Asia, Latin America and the Middle East.

We’re also reading and listening to . . . 

• Crumbling hospitals: A long-standing lack of capital spending has left the NHS struggling with a record £11.6bn in accumulated maintenance backlog.

• India election: The shock loss of his ruling Bharatiya Janata party’s majority has dealt a stunning blow to Prime Minister Narendra Modi ahead of his third term.

• HSBC: With US-China tensions on the rise, the bank’s next chief executive will need to have diplomatic skills, writes Kaye Wiggins.

• 🎧 FT’s Untold: Ahead of EU elections starting tomorrow, don’t miss the final two episodes of our podcast series investigating the fine line between influence and corruption in the European parliament.

Chart of the day

More than half of British universities featured in a leading global ranking of academic institutions have seen their ratings decline this year as the UK higher education sector faces a financial squeeze and domestic political attacks on its reputation.

Take a break from the news

Looking for things to do in Melbourne? National Gallery of Victoria director Tony Ellwood tells FT Globetrotter where he likes to shop, dine, and take in art in the Australian city.

Additional contributions from Benjamin Wilhelm and Gordon Smith