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The Present and Future of Gazprom

The Present and Future of Gazprom

Gazprom’s 2010-2011 financial results were phenomenal. An employment contract of Gazprom CEO Alexey Miller, who has been managing the gas giant for 10 years, was prolonged ahead of time for another five years. However, the country’s main company found itself under powerful pressure both on the domestic and external markets.

Authorities actively support expansion of NOVATEK, whose development is limited by a monopolistic character of the gas market, or, to put it differently, by the existence of Gazprom in its current form. This process unfolds without radical moves so far, considering the upcoming elections, but in the next electoral cycle serious reconstruction of the market is possible.

Outside the country Gazprom is also facing problems. Moscow and Brussels have entered tough confrontation over the rules of operation on European markets, as well as over variants of gas transit from the Caspian Sea region. The question of transit through Ukraine is not solved either. There is a complicated dialogue with China. Attempts to develop relations with Japan following the Fukushima NPP catastrophe and revive the project of laying a trans-Korean gas pipeline do not promise fast and obvious dividends.

Meanwhile, there is a necessity to sharply increase investments in gas production and transportation. The respite Gazprom received in the production segment during the crisis drop in the EU demand for natural gas is over.

A new report elaborates on the following issues:

  • Changes at Gazprom during A. Miller’s 10 year tenure

    • Revenues and expenditure, efficiency of the company’s operation
    • Situation in the production sector
    • Transportation and marketing
    • HR policies of the monopolist

  • Competition with NOVATEK as one of the main intrigues

    • Situation on the domestic gas market
    • Different taxation approaches to companies
    • The future of the single export channel
    • Shtokman vs. Yamal LNG
    • Competition in petrochemistry

  • Gazprom on external markets

    • Gazprom’s standing in the post-Soviet area
    • Situation around gas transit to Europe
    • European-Caspian storm
    • Asian vector of development, the future of LNG business

  • Forecast of developments

    • The time of grand spending
    • The future of Yamal, Shtokman, Eastern Siberian program, gas processing plants and new pipeline projects
    • Prospects of the Russian gas sector development after Vladimir Putin’s comeback as Russian president

The contents of the report:

Introduction 3
Chapter 1. How Gazprom Has Changed for 10 Years of Aleksey Miller’s Rule 4
  1.1. Capitalisation, Financial & Economic Standing of Corporation 6
  1.2. Upstream Unit 8
  1.3. New Lines of Business 10
  1.4. Second Wave of Splitting of Assets off from Gazprom 12
  1.5. Staff 13
Chapter 2. Growth of Novatek 15
  2.1. Domestic Market 16
  2.2. Novatek Strategy, Production Growth Prospects 19
  2.3. MRET 20
  2.4. Yamal LNG vs. Shtokman 21
  2.5 Scheming against Single Export Channel 22
Chapter 3. Gazprom in Foreign Markets 24
  3.1. Export Division Reorganisation 24
  3.2. From Intermediaries to Intermediaries 30
  3.3. Demand in Europe after Fukushima, Revision of Long-term Contracts 33
Chapter 4. “War” with Europe: from Nord Stream to Orientation towards Asia 38
  4.1. Gas to Europe Round Transit Countries 38
  4.2. Combat on Caspian Sea, Confrontation with Brussels 43
  4.3. Orientation Towards Asia, Solidarity with Other Exporters 45
Chapter 5 Time of Massive Expenditure 49
  5.1 Yamal Mega Project 50
  5.2. Sakhalin 52
  5.3. Yakutia 54
  5.4. Shtokman 54
  5.5. South Stream 56
Chapter 6. Forecast. Gazprom on Path to Restructuring 59
Date of issue: December 9th, 2011

If you are interested to obtain please contact » Elena Kim

Other issues:
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Gazprom is being actively thrown out of the market. Its annual supplies to Europe have shrunk from the previous 150 billion to 65 billion cubic metres of gas. European officials assure that they have already learnt how to live without Russian gas, so they will bring its purchases down to but nominal values in 2023. Their main hope is liquefied natural gas. Today the EU must make a crucial decision: whether it has passed the point of no return in gas business with Russia and whether it is certain that its economy will endure without supplies of Russian pipeline gas. Or, on the contrary, Europe will realise after all that the gas balance will not be achieved and the payment for so headlong a rush for LNG will be disproportionate. Assessment of the potential volume of LNG that will appear on the market before the end of the current decade will be the most important factor for making the decision.
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