Tenenit

Gazprom (ОАО “Газпром”) is a Russian company known mainly for the production and the transport of Natural gas. Since 1954, it is the first operating one and the first exporter of gas in the world. Since 2005, it is also a major actor on the worldwide market of the Pétrole.

It is the largest company of Russia and the 4th Market cap in the world, behind Exxon Mobil, General Electric and Microsoft. In 2005, the company contributed for 20% to the budget revenue of the Russian State and contributed to a total value of 8% with GDP. It employs more 300 000 people.

In 2004, it produces approximately 93% of Russian natural gas, while controlling 16% of world reserves, that is to say approximately 28 800 km ³. The company has in particular the Gisement S of the Ourengoï and Chtokman. Its customers are in Central and Western Europe, like in old the the USSR.

In addition to its gas reserves naturalness, and wide-area network of Pipeline S in the world (150 000 km), it holds positions in the Banque S, the Assurance, the Média S, the Construction and the Agriculture.

History

This company is resulting from the Soviet ministry Gaz.

In September 2005, Gazprom announced construction, for 2010, of a Gazoduc of 1 200 km under the the Baltic. One of the objectives is to circumvent the Poland and the Ukraine and thus to avoid the costs of transit and the risks of possible “not sanctioned taking away” (according to the expression of Gazprom).

The company is with dimensions with London Stock Exchange since of January 1st, 2006 and almost doubled value in two months following the crisis with the Ukraine (see will infra). The international investors hold surroundings 20% of the capital, the Russian State, 50% plus an action, the remainder being distributed between Russian holders.

To maintain the level of its exports, Gazprom must put in production the fields of the peninsula of Yamal and for this reason to invest tens of billion USD, while at the same time the very low price of gas on the Russian market (3/4 of the outlets of Gazprom) does not allow to pay these investments. The internal prices of Gazprom for gas spread out, at the end of 2005, from 25 to 48 $/1000 m ³, while they exceeded the 200 $/1000 m ³ for its foreign customers. For more details, to see off The Future Russian Gas and Gazprom de Jonathan Stern.

Strategic weapon with the service of the Russian State

In spite of a partial privatization under the presidency of Boris Eltsine, the Gazprom company always remains under a narrow control of the Russian State, which, of 2004 to 2006, made pass its share in the capital of 38% to more than 50%. It dominates the Russian and world gas market.

This strong position in a context of a world rise of the request, would make it possible the the Kremlin to potentially exert pressures on the countries customers (Soviet ex-republics, Europe Central and Western) on which some are depend to 90-100% on the Russian supplies.

Right now, Gazprom more and more extremely requires to have rights of access with the distribution of gas in Europe, with an aim of being present throughout the gas circuit - upstream until in downstream, while preserving its dominant position in the field of the extraction in Russia.

With an aim posted to make safe the gas supply of the Western Europe, a great project of Gazoduc with the Germany via the the Baltic was launched in large pump. It makes it possible to avoid the transit by the third countries, shown by Gazprom to overload the transit duties (Poland) or to fly of the gas (Ukraine).

In addition, to prevent a possible diversification of provisioning of the European countries, however not very realistic with large scales, inspired by the confrontation between Gazprom and the Ukraine in January 2006, Gazprom actively prospects side Chinese, Korea N or Japan board to build new sections of gas pipelines towards these countries, and considers the construction of a méga-terminal of Natural gas liquefied in North with the assistance of the Canadians to feed the North America.

In this context of uncertainties, the monopoly of Gazprom (9/10 of the gas production of the country) is highly criticized by many countries customers which would wish to be supplied in competition.

Attempts at reforms were suggested, like the development of competitor operators independent of Gazprom and the increase of the regulated domestic tariffs of gas (without calling into question the monopoly of export of Gazprom). On this subject, the president Vladimir Poutine remains careful since the company became one of the tools of the Russian foreign policy.

Some see in Gazprom a “Trojan horse” of the Russian influence in the countries of the Soviet ex-Union and worry about a growing dependence of Eastern, but so central and Western Europe. More especially as the liberalization of the electric and gas sector in Western Europe offers to Gazprom important economic and financial benefit on the European market of energy, and that those Ci are also political and diplomatic profits for the Kremlin (source: ). Some there even see a passage of geopolitics to the “geoeconomy”, following the example American Senator Richard Lugar, consider that Russia is becoming a “energy super power”.

March 8th, 2006, the European commission published a green Book on the European strategy of the energy whose shutter relates to the external co-operation. April 18th, Gazprom counteracts while making include/understand with its european consumers who they could be broken down gas if they were not shown more co-operative, while renonçant with “ to politicize the gazières questions; ” and while allowing Gazprom to take the control of part of the distribution in the countries of the European Union.

Dependence with the Russian gas supply

Gazprom provided to the Western Europe 25 % of its provisioning of Natural gas in 2005. The Baltic States and the Finland are dependant at 100%, the Austria to 55%, the Germany to 37%, the France to 21%. The gas in direction of the European Union is transported primarily via the Ukraine and the Bielorussia (10%).

The crisis with the Ukraine

Until the December 31st 2005, the Ukraine profited from advantageous price thanks to its good relationships and its statute of old country of the Soviet Union. Gazprom wished to align the price of Ukrainian gas, until strongly subsidized there (47 USD by 1000 m ³, against 230 USD on the European market). Gazprom argued its decision by the fact that the Ukraine had obtained the statute of economy of the market, and was to thus be in the same conditions that the rest of Europe.

Following long and unfruitful negotiations, whereas the Ukraine refused to pay the market price, on January 1st 2006, Gazprom decided to cut the gas supply, by injecting only the quantities intended for Europe.

However, as Kiev had continued its taking away, and insofar as 80% of the supplies of the Russian gas European countries forward by the Ukraine, that involved difficulty of provisioning at certain countries of Western Europe, and resulted in internationalizing the crisis.

January 3rd, 2006, the Ukraine accepts alignment on the European market price and Gazprom starts again to supply the gas pipelines with full capacity.

However, the terms of this agreement impose, in practice, a less severe increase in the price of gas. The Ukraine will pay 95 USD by 1000 in practice; m ³, because the deliveries will be partly made up by Turkmen gas with 50 USD via a mixed company RosUkrEnergo whose shareholders are not clearly known.

Extension of the influence in Arménie

The Arménie depends at 100% on Russia for its gas supplies. It moreover one is combined of Moscow in the area. An agreement was signed in April 2006 with Gazprom. The company provides cheap gas (110 USD for 1 000 m ³) during 25 years. N the other hand, the participation of this one in the Armenian company of gas distribution ARM RosGazprom passes from 45% to 75%. By this operation, Gazprom takes the control of the Gazoduc in construction having to connect Arménie to the Iran.

Alliance with Algeria

Friday, January 19, the leaders of Gazprom and Sonatrach evoked once more the advantages that there would be to be linked to attack the European market. Russia and Algeria are the first suppliers of gas at the EU. A close co-operation between them can involve a rise of the prices. This agreement would not be at all in the interest of Brussels. It could constitute a first step in the creation of OPEC of gas, that Russia calls its wishes. Russia, as a first gas supplier in the world, would take the head of it, and could use it like action leverage to increase the pressure on Europe. EnergieInfluence site

Difficult negotiations with Bielorussia

At the end of 2006, the Bielorussia ardently negotiated the price of its gas, which it paid until this date 47 USD for 1.000 m ³ (against more than 250 dollars then on the European market). Threatening to cut the taps unless obtaining the asking price, Gazprom obtained a final agreement in extremis on December 31st, 2006 at a price of 100 USD for 1.000 m ³. Moreover, it obtained in compensation 50% of the titles of the Belorusse gas undertaking Beltransgaz (whose amount of 5 billion USD is considered overestimated by the Russian experts).

Outraged by this increase, Bielorussia applied a tax on the transit of Russian oil towards the countries more to the West (45 USD/tonne) which it had to abolish a few days afterwards under the pressure of Moscow.

Bonds with Gerhard Schröder

The government of Gerhard Schröder went guaranteeing of a credit of a billion euros suggested by the banks Deutsche Bank and KfW in Gazprom for the construction of a German-Russian gas pipeline at sea Baltique.

To have shortly after yielded the capacity to Angela Merkel, Gerhard Schröder was engaged by Gazprom to direct the Board of trustees of the German-Russian consortium charged to build this gas pipeline, whose Gazprom holds 51%. Gazprom however refused this loan of the two banks thereafter.

Sources

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