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Gazprom: are there Limits to the Growth?

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

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Analytical series “The Fuel and Energy Complex of Russia”:

New OPEC+ Deal and Future of Oil Business in Russia
Gazprom on the background of external and internal challenges
Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia
The tax system in the oil and gas sector continues to undergo radical changes. The beginning of 2019 saw the introduction of a new tax regime: additional income tax. That experiment was supposed to start migration of the oil industry to an innovative principle of taxation: on profit, not revenue. It seemed that a new main road was found. In the same year, however, the Finance Ministry launched an overt offensive against AIT. The fear of loss of government revenue now is more powerful than the threat of causing oil production to collapse in the medium term because of a tax system that does not stimulate investment. The Finance Ministry would strongly prefer to speed up the tax manoeuvre completion that earns the state budget additional money. Oil and gas companies respond to this with individual lobbying, attempting to wangle special treatment for their projects.
Ukrainian Gas Hub: Climax at Hand
The “zero hour” comes in less than a month: the contracts for gas transit through Ukraine and for supplying Russian gas to the country terminate at 10 am on 1 January. Meanwhile, Gazprom and Naftogaz are very far from looking for a mutually acceptable solution. The entire European gas business is watching intently the negotiations between Russia and Ukraine. Everyone is waiting for a new “gas war”: the January 2009 events proved to be a serious test both to European consumers and to Gazprom as a supplier. Is there still a chance of agreement? If there is not, will Gazprom cope with its obligations to deliver gas to Europe? Is Russia bluffing as it assures that the new infrastructure and gas in underground storage facilities will enable it to get by without Ukrainian transit even as soon as this winter? What will happen to Ukraine itself at the beginning of 2020?

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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