Gazprom: Russia's ministry of ambition

Gazprom chief executive Alexei Miller has warned Europe — keen to break Russia's stronghold on gas supplies — against turning the issue of energy diversification into a “fetish.”

But analysts say it is the Russian gas giant's own actions that are now bordering on the abnormal, with deals often being motivated by factors like politics or pride rather than economic sense.

“Gazprom has acquired the function of the foreign energy relations ministry,” said Mikhail Korchemkin, director of the East European Gas Analysis think tank.

“Like the ministry, it's being driven by factors other than profit.”

Recent Gazprom deals have worried analysts that the country's largest publicly traded company has become a political vehicle whose sole purpose at times is to cripple a rival project at the expense of economic sense.

The West has long accused Russia of employing hard-knuckle tactics to pursue its energy goals at home and abroad. Former U.S. Vice President Dick Cheney in 2006 famously described Russia's energy riches as “tools for intimidation and blackmail.”

A deal in June with Azerbaijan listing Gazprom as a preferential buyer for gas from the second development phase of the country's enormous Shah Deniz offshore field was primarily aimed at thwarting Europe's Nabucco gas pipeline project Europe rather than making a profit, analysts said.

“Given Gazprom's excessive domestic production capacities, we see more politics than economics in this agreement,” Renaissance Capital investment bank said.

A recent report in the Kommersant newspaper said Russia has offered to pay Azerbaijan as much as 350 dollars per one thousand cubic meters of gas.

Gazprom also sees itself as a force to help Russia reassert its clout in Africa, another former Soviet sphere of influence.

During President Dmitry Medvedev's four-nation tour of Africa late last month, Gazprom and Nigerian National Petroleum Corporation agreed to establish a 50/50 venture that would invest at least US$2.5 billion to explore and develop some of Africa's largest oil and gas reserves.

1|2|Next Page>>

SharePrintEmail

Write a Comment

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos Respond to this email