Gazprom (, ) is the largest extractor of natural gas in the world and the largest
Russian company. Gazprom was created in 1989 when the Ministry of Gas Industry of the
Soviet Union transformed itself into a corporation, keeping all its assets intact. The company was later privatized in part, but currently the Russian government holds a controlling stake.
In 2008, the company produced 549.7 billion cubic metres (BCM) of natural gas, amounting to 17% of the worldwide gas production. In addition, the company produced 32 million tons of oil and 10.9 million tons of gas condensate. Gazprom's activities accounted for 10% of Russia's gross domestic product in 2008.
The major part of Gazprom's production fields are located around the Gulf of Ob in Yamalo-Nenets Autonomous Okrug in Western Siberia, while the Yamal Peninsula is expected to become the company's main gas producing region in the future. Gazprom possesses the largest gas transmission system in the world, with 158,200 kilometres of gas trunk lines. Major new pipeline projects include Nord Stream and South Stream.
The company possesses subsidiaries in many different industry sectors, including finance, media and aviation. In addition, it controls majority stakes in various companies.
Gazprom is publicly traded at stock exchanges as , , , and OTC:OGZPY.
History
1989-1992: Inception
A separate Soviet gas industry was created in 1943. Large natural gas reserves discovered in
Siberia and the
Ural and
Volga regions in the 1970s and 1980s enabled the Soviet Union to become a major gas producer. Gas exploration, development, and distribution were
centralized in the Ministry of Gas Industry, which was created in 1965.
In August 1989, under the leadership of the Minister of Gas Industry Viktor Chernomyrdin, the ministry transformed itself into State Gas Concern Gazprom, which became the country's first state-corporate enterprise. The company was still controlled by the state, but now the control was exercised through shares of stock, 100% of which were owned by the state. Gazprom kept assets located in the territory of Russia, and was able to secure monopoly in the gas sector. Assets in the oil industry, on the other hand, were divided among several companies.
In March 1998, for reasons unrelated to Gazprom, Yeltsin fired Chernomyrdin from his position as Prime Minister. On 30 June 1998 Chernomyrdin returned to the position as the Chairman of the Board of Directors.
2000-2003: The Putin reforms
Gazprom's situation changed abruptly in June 2000, when
Vladimir Putin became the President of Russia. Putin launched a campaign to rein in the
oligarchs and, per his policy of the so-called
national champions, to establish state control in strategic companies. Putin's actions were aided by shareholder activism by
Hermitage CEO
William Browder and former Russian finance minister
Boris Fyodorov. Miller and Medvedev were assigned the task of stopping the asset-stripping, but also to regain lost possessions. By denying Itera access to Gazprom's pipelines, Miller almost forced Itera to bankruptcy. As a result, Itera's management agreed to sell the stolen assets back to Gazprom.
2005-2006: Establishment of government control
In June 2005,
Gazprombank, Gazpromivest Holding,
Gazfond and Gazprom Finance B. V., subsidiaries of Gazprom, agreed to sell a 10.7399% share to the state-owned company
Rosneftegaz for $7 billion, at what some western analysts viewed as an undervalued price. The sale was to be completed by 25 December 2005, which, combined with the 38% share of the State Property Committee, gave the Russian government control over the company.
As the Russian state had now acquired a controlling share, the 20% restriction on foreign investment in Gazprom was lifted, and the company became fully open to foreign investors.
On 20 July 2006, the Federal Law "On Gas Export" granting Gazprom exclusive right to export natural gas was published, and hence came into force. It was almost unanimously approved by the State Duma on 5 July, by the upper house, the Federation Council on 7 July and signed by President Vladimir Putin on 18 July.
Notable acquisitions
In April 2001 Gazprom took over
NTV, Russia's only nationwide state-independent television station held by the oligarch
Vladimir Gusinsky's Media-Most holding. In 2002 the Gazprom subsidiary
Gazprom Media acquired all of Gusinsky's shares in the companies held by Media-Most.
In September 2005, Gazprom bought 72.633% of the oil company Sibneft (now Gazprom Neft) for $13.01 billion, aided by a $12 billion loan, which consolidated Gazprom's position as a global energy giant and Russia's biggest company. On the day of the deal the company was worth £69.7 billion/US$123.2 billion.
In December 2006, Gazprom signed an agreement with Royal Dutch Shell, Mitsui and Mitsubishi, taking over a half plus one share in Sakhalin Energy.
In June 2007, TNK-BP, a subsidiary of BP plc agreed to sell its stake in Kovykta field in Siberia to Gazprom after the Russian authorities questioned BP's right to export the gas to markets outside Russia. On 23 June 2007, the governments of Russia and Italy signed a memorandum of understanding to cooperate on a joint venture between Gazprom and Eni SpA to construct a 558-mile (900 km) long gas pipeline to carry 1.05 trillion cubic feet (30 billion cubic metres) of gas per year from Russia to Europe. The South Stream pipeline would extend under the Black Sea to Bulgaria with a south fork extending to Italy and a north fork to Hungary.
Supply
Production
In 2008, the Gazprom group produced 549.7 billion
cubic meters of natural gas. This amounted to 17% of the
worldwide and 83% of Russian production. Of this amount, the
Yamburg subsidiary produced 41%,
Urengoy 23.6%,
Nadym 10.9%,
Noyabrsk 9.3% and others 15.2%. In addition, the company produced 32 million tons of oil and 10.9 million tons of gas consendate.
Major part of Gazprom's current production fields are located in the Nadym-Pur-Taz region (near the Gulf of Ob) in Yamalo-Nenets Autonomous Okrug in Western Siberia. The three largest ones—Medvezhe, Urengoy and Yamburg—have been sustaining Russian gas production for 20 years. They are now in a declining state of production, with production falling by 2025 bcm per year. Gazprom's fourth large field, Zaporliarnoe was able to increase production until 2004, which offset the decline in the three largest fields.
Crude oil production comes mostly through the subsidiary Gazprom Neft, which was previously called Sibneft. Gazprom bought 75% of the company's shares in 2005 for $13.1 billion.
Exports
Gazprom delivers gas to 25 European countries, the only major exceptions being Spain and Portugal. The vast majority of Russian gas in Europe is sold on long-term 2025 year contracts, although recently the subsidiary
Gazprom Marketing and Trading has been increasingly active in the short-term sales business. The
European Union as a whole gets about 25 percent of its gas supplies from Gazprom.
Price disputes
On 1 January 2006, at 10:00 (Moscow time), during the
Russia-Ukraine gas dispute, Gazprom ceased the supply of gas to the Ukrainian market, calling on Ukraine's government to pay increases that partially reflected the global increases in fuel prices.
During the night from 3 to 4 January 2006, Naftogas of Ukraine and Gazprom negotiated a deal that temporarily resolved the long-standing gas price conflict between Russia and Ukraine.
On 13 March 2008, Gazprom agreed to supply Ukraine with gas for the rest of the year in a deal that will cut out intermediary companies, a move it hopes will end payment disputes. Ukraine will pay $315 (£115) per 1,000 cubic metres of gas supplied in January and February this year, then between March and December it will pay $179.50 per 1,000 cubic metres. This came after a three day crisis the week before when gas supplies to Ukraine were halved.
On 3 April 2006, during the Russia-Belarus energy dispute, Gazprom indicated it would triple the price of natural gas sold to Belarus after 31 December 2006. In December 2006 Gazprom threatened a cut-off of supplies to Belarus at 10 am Moscow time on 1 January 2007, unless it agrees to raise the price it pays for the gas from $47 to $200 per 1,000 cubic metres or to cede control over its distribution network. Some analysts suggested Moscow was penalising Alexander Lukashenko, the President of Belarus, for not delivering on pledges of closer integration with Russia, while others noted that other friendly countries like Armenia were paying as much for their gas as Belarus would with the new price levels.
Later Gazprom requested a price of $105, yet Belarus still refusing the agreement. It responded that if supplies were cut, it would deny Gazprom access to its pipelines, which would hurt gas transportation to Europe. However, on 1 January 2007, just a few hours before the deadline, Belarus and Gazprom signed a last-minute agreement. Under the agreement, Belarus undertook to pay $100 per 1,000 cubic metre in 2007. The agreement also allowed Gazprom to purchase 50% of the shares in Beltransgaz, the Belarusian pipeline network. Immediately following the signing of this agreement Belarus declared a $42/ton transportation tax on Russian oil travelling through the Gazprom pipelines crossing its territory.
In November 2008 Gazprom and Ukraine escalated their dispute. This resulted in both Gazprom and Ukraine's Naftogaz cutting gas supplies to part of Europe in 2009.
Company characteristics
Gazprom is a vertically integrated company which dominates both upstream and downstream activities. It owns all main gas-processing facilities in Russia, operates the country's high pressure pipelines and has (since 2006) a legal export monopoly. Other natural gas producers, such as Russia's second largest gas company Novatek, are forced to use Gazprom's facilities for transmission and processing.
The company also controls assets in banking, insurance, media, construction and agriculture.
In 2008, Gazprom's activities made up 10% of the Russian GDP. For instance, the Russian section of Blue Stream pipeline was three times more expensive to construct per kilometer than the Turkish section of the pipeline.
Russian Federal Agency for Federal Property Management (Rosimushchestvo) - 38.373% (Rosimushchestvo was abolished by May 2008.)
Gazprombank (nominee holder) - 41.235% (including 13.2% of ADR holders)
Rosneftegaz - 10.74%
Gerosgaz - 2.93%
E.ON Ruhrgas - 2.5%
The Russian government controls 50.002% of shares in Gazprom through Rosimushchestvo, Rosneftegaz, and Rosgazifikatsiya.
Viktor Zubkov (Chairman, First Deputy Prime Minister of Russia, former Prime Minister of Russia)
Alexey Miller (Deputy Chairman, Chairman of the Management Committee, CEO, Chairman of Gazprombank, former Deputy Minister of Energy of Russia)
Alexander Medvedev (Deputy Chairman, Director General of Gazprom Export, President of Kontinental Hockey League, member of the Coordination Committee of RosUkrEnergo)
Alexander Ananenkov (Deputy Chairman, Gazprom shareholder)
Burckhard Bergmann (Chairman of the Executive Board of E.ON Ruhrgas AG)
Farit Gazizullin (former Minister of State Property of Russia, former Minister of Property Relations of Russia)
Elena Karpel (Head of the Department for Pricing and Economic Expert Analysis, member since 25 June 2004)
Viktor Khristenko (Minister for Industry of Russia, former Minister for Industry and Energy of Russia, former First Deputy Prime Minister of Russia)
Elvira Nabiullina (Minister of Economic Development and Trade of Russia, former First Deputy Minister of Economic Development and Trade)
Mikhail Sereda (Deputy Chairman of Gazprombank, Head of Administration)
Igor Yusufov (Special Envoy of the Russian President for International Energy Cooperation and Ambassador-at-Large of the Russian Ministry of Foreign Affairs)
Former members of the board:
Alexandra Levitskaya (until 25 June 2004)
Dmitry Medvedev (President of Russia, former campaign manager for Vladimir Putin, former First Deputy Prime Minister of Russia, Chairman 2000-2001 and again 2002-2008)
Boris Fyodorov (Gazprom shareholder, former Finance Minister of Russia and of the Russian SFSR, member until 20 November 2008)
Viktor Chernomyrdin (founder of Gazprom, first Chairman of the Board and the Management Committee 1989-1992, former Prime Minister of Russia, former Acting President of Russia, former Russian ambassador to Ukraine, presidential adviser to Dmitry Medvedev)
Rem Viakhirev (Chairman of the Board and the Management Committee 1992-2001 (including hiatus 2000-2001) and businessman)
Management committee
Gazprom's management committee as of December 2006:
Alexei Miller (Chairman, Deputy Chairman of the Board, CEO, Chairman of Gazprombank, former Deputy Minister of Energy of Russia, member since 2001)
Alexander Ananenkov (Deputy Chairman, Deputy Chairman of the Board, Gazprom shareholder, member since 17 December 2001)
Valery Golubev (Deputy Chairman, Head of the Department for Construction and Investment, former Head of the Vasileostrovsky District, former member of the Federation Council of Russia, member since 18 April 2003)
Alexander Kozlov (Deputy Chairman, member since 18 March 2005)
Andrey Kruglov (Deputy Chairman, Head of the Department for Finance and Economics, member since 2002)
Alexander Medvedev (Deputy Chairman, Deputy Chairman of the Board, Director General of Gazprom Export, President of Kontinental Hockey League, member of the Coordination Committee of RosUkrEnergo, member since 2002)
Mikhail Sereda (Deputy Chairman, Head of Administration, Deputy Chairman of Gazprombank, member since 28 September 2004)
Sergei Ushakov (Deputy Chairman, member since 18 April 2003)
Elena Vasilyeva (Deputy Chairman, Chief Accountant, member since 2001)
Bogdan Budzulyak (Head of the Department of Gas Transportation, Underground Storage and Utilization, member since 1989)
Konstantin Chuychenko (Head of Legal Department, Head of the Control Department of Russia, presidential aide to Dmitry Medvedev, former chairman of Gazprom Media, executive director of RosUkrEnergo, former KGB officer, member since 2002)
Viktor Ilyushin (Head of the Department of Relationships with Regional Authorities of the Russian Federation, member since 1997)
Olga Pavlova (Head of the Department of Asset Management and Corporate Relations, member since 2004)
Vasiliy Podyuk (Head of the Department of Gas, Gas Condensate and Oil Production, member since 1997)
Vlada Rusakova (Head of the Department of Strategic Development, member since 5 September 2003)
Kirill Seleznev (Head of the Department of Marketing and Processing of Gas and Liquid Hydrocarbons, member since 27 September 2002, Director-General of Mezhregiongaz)
Former members of the management committee:
Nikolai Guslisty (1997 - 18 March 2005)
Yury Komarov (former Director General and former Acting Director General of Gazprom Export, former head of development of the Shtokman Field, former Representative of Russia to the Asia-Pacific Economic Cooperation forum) (8 August 2003, - 12 May 2005)
Alexander Ryazanov (former CEO of Surgut Gas Processing Factory, former First Deputy Chairman of the Board, former President of Sibneft, former deputy (ie member) of the State Duma) (2001 - 15 November 2006)
Mikhail Akselrod (until 18 March 2005)
Boris Yurlov (until 16 April 2004)
Nikolai Gornovsky (until 18 April 2003)
Vladimir Leviev (until 18 April 2003)
Sergei Lukash (until 18 April 2003)
Vladimir Rezunenko (until 26 June 2003)
Alexander Krasnenkov (until 8 August 2003)
Shareholdings
Shares of the members of the Board of Directors and Management Committee (as of 5 September 2005):
Alexander Ananenkov - 0.00709654%
Alexander Ryazanov - 0.00513865%
Bogdan Budzulyak - 0.00443534%
Vasily Podyuk - 0.00131962 %
Elena Karpel - 0.00086595%
Vlada Rusakova - 0.00019009 %
Andrey Kruglov - 0.00006336 %
Boris Fyodorov - 0.00000422%
Alexei Miller - 0.00000027%
Others have no share.
Sports sponsorships
Gazprom is the sponsor of
Russian Premier League football club
FC Zenit Saint Petersburg.
On 1 January 2007 Gazprom also became the sponsor of the German Bundesliga club FC Schalke 04 paying up to €25 million a year for the privilege. On 23 November 2009, the partnership was extended for a further 5 years. The sponsorship is worth $150m (USD) spread over the 5 years.
On 9 July 2010 Gazprom became sponsor of Serbian Serbian SuperLiga football club Red Star Belgrade.
On late 2010, Gazprom became sponsor of Venezuelan football club Deportivo Táchira.
Gazprom by 2010 Gold Partner of the Russian professional cycling team, Team Katusha, in alliance with Itera, and Russian Technologies (Rostekhnologii).
See also
Naftogaz
CentGas consortium
List of Russian companies
http://www.forbes.com/companies/gazprom/
References
Sources
External links
GazProm Corp. - Federal Corporation of Canada
Category:Oil companies of Russia
Category:Natural gas companies of Russia
Category:Oil companies of the Soviet Union
Category:Natural gas companies of the Soviet Union
Rus
Category:Companies based in Moscow
Category:Companies established in 1989
Category:Natural gas pipeline companies
Category:Resource conflict
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