Is Russia's Putin Positioning For Top Gazprom Job?

LONDON (Dow Jones) -- When Tony Blair steps down as British prime minister in June, no one knows where his ambition will take him.

There seems to be less uncertainty for Russian President Vladimir Putin, who's believed to have long been planning his next career move.

"The position of CEO in a multinational oil and gas corporation with a big Russian state's stake is what Putin wants," said Konstantin Simonov, general director of the National Energy Security Fund in Russia and an expert on Russian political and business elites. He was speaking at a conference on energy security in London's Chatham House on Tuesday.

"The elections are next spring. He may be a bit tired... He needs to create a spot for himself that he can take after resigning in 2008 and that can be a promotion for him compared to the Russian president status," said Simonov.

"He's currently building his retirement spot at the head of a global player in the world's energy market," he added.

As the world's largest gas producer, OAO Gazprommay well be an ideal candidate.
Putin has backed Gazprom's efforts to extract maximum possible terms from its European customers as well as former satellite countries such as Ukraine and Belarus.

Putin has also worked to see off potential rivals, masterminding the Kremlin's dismemberment of Michael Khordokovsky's rival oil company Yukos, whose assets now belong to Rosneft and Gazprom.

Finally Putin has managed to gradually squeeze Western companies out of Russian investments, alleging breach of environmental regulations, as when he backed a decision to force Royal Dutch Shellto sell control of its Sakhalin energy project to Gazprom.

Simonov cautioned that such policies are likely to continue. He said that if Gazprom and Rosneft don't have a controlling stake in an upstream project, they are likely to gain one using "administrative resources" as was the case of Shell and Sakhalin. "The main goal of Russia's energy policy today is to enable Gazprom to become a transnational company and Putin to be the most powerful businessman in the oil and gas market," Simonov said.

But some weren't so sure the Russian president is actually coveting the top job at Gazprom, stressing that Putin himself has always said he's not a natural businessman. "I find it unlikely that it's where he wants to go next. If you look at his career, after the KBG and the presidency, he could view it as a step down," said James Nixey, manager of the Russia and Eurasia program at Chatham House.

He added that the dismantlement of Yukos should, if anything, suggest to Putin that a job at the head of a global energy giant may not be a sound strategic retreat.

Russian still in dominant position, E.U. needs to unit for bargaining power.

As Putin mulls his retirement options, Russia is showing no sign of sweetening its rhetoric on energy policy. And with control over 27% of the world's gas resources and 6% of the planet's oil resources, it can afford to speak tough.

Europe and Western companies, meanwhile, can't afford to snub Russia because of their reliance on Russian gas. Gazprom provides over a quarter of Europe's gas. The E.U.'s bargaining power, as a result, is weak, particularly as it lacks of cohesive energy policy.

"Meeting Gazprom's market power needs European coherence," said Dieter Helm, professor of energy policy at Britain's Oxford University. He believes that as the sole consumer of Russia's gas exports and a significant source of revenues, the E.U. and Turkey could have significant clout in negotiations if they could present a common front.

Sean O'Reagan, who's involved with energy security policy at the general secretariat of the council of the E.U., said that while Russia has a right to get the best price for its resources, the E.U. also expects it to respect its commitment to a legally predictable regulatory environment and to increased transparency.

"We need to reestablish trust," O'Reagan said, referring to recent hiccups including gas transit disruptions involving the Ukraine and Belarus.

The conference took place as the E.U. and Russia prepare to meet at an energy summit next week to try to deepen cooperation over trade and energy.

Source: Dow Jones Business News
             By Aude Lagorce

 [ 05-16-07 0937ET ]