Russian gas giant Gazprom's shares slumped 30% after it nixed dividends for the first time since 1998

• Russian gas giant Gazprom announced it's withholding dividend payout for 2021 earnings.
• The state-owned gas giant's share price tanked almost 30% on the news.

Shares of state-owned Russian gas giant Gazprom plunged nearly 30% in just one day on Thursday after the company said it's not paying dividends for the first time since 1998.

"Shareholders have decided that in the current situation, it is not advisable to pay dividends for 2021," said Famil Sadygov, the deputy chairman of the Gazprom management committee, according to a post on the company's official Telegram channel.

The Russian state is Gazprom's largest shareholder with a 38% stake in the company, according to the Financial Times.

Gazprom shares on the Moscow Stock Exchange cratered by about 29% on the announcement — which reversed a board recommendation to pay a record 52.53 rubles per share. The stock was trading around 5% lower early Friday.

The company reported all-time high profits in 2021 thanks to soaring energy prices on a demand recovery as pandemic restrictions eased.

Gazprom's announcement that it's withholding dividends comes amid a plan by the Group of Seven to cap Russian oil prices. The powerful group of the world's most economically developed democracies is aiming to stop Russia from funding its war in Ukraine amid the booming energy markets.

Although Gazprom's earnings are currently bolstered by high energy prices, its natural-gas exports to countries outside the Commonwealth of Independent States fell almost 28% on-year from January to May, Reuters reported last month, citing information from the company.

Last month, the gas titan cut natural-gas flows to Europe after some countries refused to pay in rubles, and after a key piece of equipment got stuck in Canada, where it had been sent for repairs.

"Currently, Gazprom's priorities are the implementation of the investment program, including gasification of the regions of the Russian Federation, and preparation for the coming winter," said Sadygov.

The company also needs to be ready to pay higher taxes, he added. Russia's Finance Ministry plans to hike Gazprom's mineral extraction tax from September through November, Bloomberg reported, citing the price of Russian crude and Interfax news agency.

Share prices of other Russian energy companies also fell on Thursday on expectations that they, too, may withhold dividends. Shares of state-owned oil giant Rosneft — whose board recommended a record dividend for the second half of 2021 — tumbled 7% on Thursday.