State-controlled Russian gas company Gazprom has quashed plans to pay a record dividend and instead will not serve shareholders for the first time since 1998.

"Shareholders have decided that in the current situation it is inadvisable to pay dividends based on 2021 results," deputy CEO Famil Sadygov said on Thursday.

Rather, Gazprom wants to focus on preparing for the heating season and paying higher taxes.

Originally, shareholders were to receive 52.53 rubles per share for the past year.

That would have been the highest payout in the company's history.

In 2021, Gazprom made a record profit of 2.09 trillion rubles (about 27.5 billion euros) thanks to sharply increased oil and gas prices.

Gazprom added that neither the plans of the G7 countries to limit gas prices nor the lower gas supplies to Europe will reduce its revenues and tax payments.

The cancellation of the dividend caused Gazprom's share price to fall by more than a quarter on the stock exchange.

"This is a catastrophe for Gazprom shares, since the company's only investment incentive was high dividends," commented analysts from Tinkoff Investments.

"The decision is also likely related in part to the Treasury Department's willingness to increase budget revenue."

Gazprom's decision comes after the G-7 announced in recent days that they would review potential price caps for Russian oil and gas in the wake of the Russian attack on Ukraine.

This was intended to limit the Russian government's ability to finance its invasion of Ukraine.

Russia then threatened to change the gas supply contracts.

Despite Russia earning more than before invading Ukraine amid soaring energy prices, the country expects a budget deficit of 2 percent of gross domestic product this year as it increases social and economic support to offset sanctions.

According to Natalia Orlova, chief economist at Alfa Bank, even with this projected budget deficit, Russia needs an oil price of $100 a barrel this year to balance its budget.