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Gazprom: are there Limits to the Growth?

Gazprom is turning into the most expensive company on the world market, accumulating resources, acquiring assets and carrying out aggressive expansion into Europe.

However, the monopoly’s management is turning out to be an outstanding problem with representatives of various clans inside the company having different visions on what Gazprom should be. Another problem that has been recently discussed is shortage of gas for long-term export contracts and for the needs of the domestic market. The discussers are mainly western watchers and some Russian ministries.

Gazprom itself displays composure, assuring it is able to boost production in case of shortage. Who is right then? Will Gazprom successfully permeate into oversea markets and expand at home or will it fail to fulfill long gas supply contracts? You are sure to find the answers in the new report prepared by the National Energy Security Foundation that analyzes key processes inside and around Gazprom.

The paper dwells on the following subjects

The picture inside Gazprom ahead of the big elections
- Transformations and turnover
- In-fighting
- Degradation of the directors’ board
- Controversy with the economy ministers – causes and consequences
- Main Gazprom’s enemies in the power structures
Attempt to reform the home gas market – response to the shortage challenge
- Long-term contracts and new pricing pattern
- Soaring investments against the background of deteriorating effectiveness of the spending
- Show-off gas supplies and attempts to reduce domestic gas consumption
- Arrival in the coal and electricity business
Escalating competition for Central Asia’s resources and conflicts with CIS gas consumers
- New risks in Turkmenistan and the Trans-Caspian gas pipeline
- The conflict with Belarus and the crisis in Ukraine – the transit turmoil
Moscow’s gas diplomacy
- Gas OPEC threat and the wrangle with the European Union
- The North Stream and the new channel to the Southern Europe
- Crusade for the retail gas markets
- Relations with oversea corporations: competition on Sakhalin and for Kovykta and at the same time joint efforts to polish off YUKOS
Predictions of how all key processes will develop in the future

The content of the report:

Introduction	2
Chapter 1. Gazprom Ahead of Elections. New Expansion Goals	4
1.1. Will Gazprom Become a Platform for the Dmitry Medvedev’s Presidential Campaign?	4
1.2. Personnel Turnover in the Monopoly	5
1.3. Regrouping of Assets inside the Company	8
1.4. Gazprom’s Board of Directors: Further Derogation of Influence	9
1.5. Repartition of RAO UES’s Assets. Acquisition of SUEK	12
1.6. Auction of Yukos’s Gas Assets. The Italian Scheme	13
1.7. Sharing of Property in the Oil & Gas Sector in the Favor of Gazprom and Persons Affiliated with the Company	15
Chapter 2. Gazprom’s Expansion on the Domestic Market. Big Projects Mean Big Problems? Pricing Issues	18
2.1. General State of the Gas Market. Future Fuel Policy	18
2.2. Misbalance between Liberalization of Power Industry and Establishment of a Full-Fledged Gas Market	20
2.3. The Problems on the Way of Gas Industry Reformation in Russia. The Long-term Contracts System	22
2.4. The Role of Independent Gas Producers in Russia	23
2.5. Gazprom’s Investment Priorities	26
2.6. New Tax Changes in the Gas Industry	28
Chapter 3. Central Asia and CIS. Risks Associated with Resources and Transit	30
3.1. Competition for Central Asia the Central Asian States are Playing Diversity of Gas Supplies	31
3.2. The Transit Problem Competition with the «Slav Mediators»	35
3.3. Gas Standoff with Azerbaijan and Georgia	38
Chapter 4. Gazprom’s Export Strategy. Standoff with the European Union and Frustrated Alliances	39
4.1. Gas OPEC and Energy NATO: Political Mythology	39
4.2. Crusade for European Markets: Attempts to Access End Consumers	42
4.3. Construction of New Gas Pipelines to Europe: Nord Stream and the South-European Gas Pipeline	47
4.4. The Shtokman’s Dilemma and the Gazprom’s LNG Strategy	48
Chapter 5. Medium-term Forecast	51
5.1. Political Future of Gazprom and the Risks of Losing Control of the Gas Giant	51
5.2. The Outlook for the Transformations in the Gas Industry	52
5.2. Obstacles for the Oversea Expansion	54

Date of publication	Volume
May 21, 2007	54 pages

If you are interested to obtain please contact » Elena Kim

Gazprom: are there Limits to the Growth?

The picture inside Gazprom ahead of the big elections

Attempt to reform the home gas market – response to the shortage challenge

Escalating competition for Central Asia’s resources and conflicts with CIS gas consumers

Moscow’s gas diplomacy

Predictions of how all key processes will develop in the future

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