Gazprom
PJSC Gazprom is a Russian majority state-owned multinational energy corporation headquartered in the Lakhta Center in Saint Petersburg. The Gazprom name is a contraction of the Russian words gazovaya promyshlennost. In January 2022, Gazprom displaced Sberbank from the first place in the list of the largest company in Russia by market capitalization. In 2023, the company's revenue amounted to 8.5 trillion rubles, a significant decline from the 11.7 trillion rubles it reported in 2022.
Gazprom is vertically integrated and is active in every area of the gas industry, including exploration and production, refining, transport, distribution and marketing, and power generation. In 2018, Gazprom produced twelve percent of the global output of natural gas, producing 497.6 billion cubic meters of natural and associated gas and 15.9 million tonnes of gas condensate. Gazprom then exports the gas through pipelines that the company builds and owns across Russia and abroad, such as Power of Siberia and TurkStream. It produced 359 billion cubic meters of natural and associated gas, a decline of approximately 13 percent from the previous year.In the same year, Gazprom has proven reserves of 35.1 trillion cubic meters of gas and 1.6 billion tons of gas condensate. Gazprom is also a large oil producer through its subsidiary Gazprom Neft, producing about 41 million tons of oil with reserves amounting to 2 billion tons. The company also has subsidiaries in industrial sectors, including finance, media and aviation, and majority stakes in other companies.
Gazprom was created in 1989, when the Soviet Ministry of Gas Industry was converted to a corporation, becoming the first state-run corporate enterprise in the Soviet Union. After the Soviet Union's dissolution, Gazprom was privatized, retaining its Russia-based assets. At that time, Gazprom evaded taxes and state regulations and engaged in asset stripping. The company later returned to government control in the early 2000s, and since then, the company has been involved in the Russian government's diplomatic efforts, setting of gas prices, and access to pipelines.
The company is majority-owned by the Russian government, via the Federal Agency for State Property Management and Rosneftegaz, while the remaining shares are traded publicly. Gazprom is listed on the Moscow Exchange. Many arbitration cases have been decided against Gazprom.
History
Origins
In 1943, during World War II, the government of the Soviet Union developed a domestic gas industry. In 1965, it centralized gas exploration, development, and distribution within the Ministry of Gas Industry. In the 1970s and 1980s, the Ministry of Gas Industry found large natural gas reserves in Siberia, the Ural region, and the Volga Region. The Soviet Union became a significant producer of gas. In August 1989, under the leadership of the minister of Gas Industry of the Soviet Union Viktor Chernomyrdin, the Ministry of Gas Industry was renamed the State Gas Concern Gazprom, and became the Soviet Union's first state-run corporate enterprise. In late 1991, when the Soviet Union dissolved, gas industry assets were transferred to newly established national companies, such as Naftogaz and Turkmengaz. Gazprom kept assets located in Russia and secured a monopoly in the gas sector.Privatization
In December 1992, when Boris Yeltsin, the Russian president, appointed Viktor Chernomyrdin, Gazprom's chairman, his prime minister, the company's political influence increased. Rem Viakhirev took the chairmanship of Gazprom's Board of Directors and Managing Committee. Following the Decree of the President of the Russian Federation of 5 November 1992, and the Resolution of the Government of Russia of 17 February 1993, Gazprom became a joint-stock company. Gazprom began to distribute shares under the voucher method.. By 1994, 33% of Gazprom's shares had been bought by 747,000 members of the public, mostly in exchange for vouchers. Fifteen percent of the stock was allocated to Gazprom employees. The state retained 40% of the shares. That amount was gradually lowered to thirty-eight percent. Trading of Gazprom's shares was heavily regulated. Foreigners were prohibited from owning more than nine percent of the shares. In October 1996, 1% of Gazprom's equity was offered for sale to foreigners as Global Depository Receipts. In 1997, Gazprom offered a bond issue of US$2.5 billion.Chernomyrdin, as Prime Minister of Russia, ensured Gazprom avoided tight state regulation. Gazprom evaded taxes, and the Government of Russia received little in dividends. Gazprom managers and board members, such as Chernomyrdin and the Gazprom Chief Executive Officer, Rem Viakhirev, engaged in asset-stripping. Gazprom assets were shared amongst their relatives. Itera, a gas trading company, also received Gazprom assets. In March 1998, for reasons unrelated to his activities at Gazprom, Chernomyrdin was fired by Yeltsin. On 30 June 1998, Chernomyrdin was made chairman of the board of directors of Gazprom.
State control
When, in June 2000, Vladimir Putin became the president of Russia, he acted to gain control over Russia's oligarchs, and increase the Government of Russia's control in important companies through a program of national champions. Putin fired Chernomyrdin from his position as the chairman of the Gazprom board. The Russian Government's stock in Gazprom gave Putin the power to vote out Viakhirev. Chernomyrdin and Viakhirev were replaced by Dmitry Medvedev and Alexei Miller. They were Putin's prior employees in Saint Petersburg. Putin's actions were aided by the shareholder activism of Hermitage Capital Management Chief Executive Officer William Browder, and the former Russian finance minister Boris Fyodorov. Miller and Medvedev were tasked with halting asset stripping at Gazprom and recovering the associated losses. Itera was denied access to Gazprom's pipelines and came close to bankruptcy. In 2006, Itera agreed to return stolen assets to Gazprom for a fee. Browder was deported from Russia in 2005, and the Russian arm of Hermitage Capital Management was seized two years later.In April 2001, Gazprom acquired NTV, Russia's only nationwide state-independent television station, from Vladimir Gusinsky's company, Media-Most Holdings. Gusinsky fell out of Putin's favor after using NTV to publish criticism from the families of sailors who died during the Kursk submarine disaster and additional criticism of Putin's handling of the Second Chechen War. Gusinsky then fled Russia, allowing Gazprom to take over NTV without his opposition.
In June 2005, Gazprombank, Gazpromivest Holding, Gazfond and Gazprom Finance B. V., subsidiaries of Gazprom, sold a 10.7399% share of their stock for $7 billion to, a state-owned company. Some analysts said the amount paid by Rosneftegaz for the stock was too low. The sale was completed by 25 December 2005, and with the purchased stock and the thirty-eight percent share held by the State Property Committee, the Government of Russia gained control of Gazprom. The Government of Russia revoked the Gazprom twenty percent foreign ownership rule; the company became open to foreign investment. In September 2005, Gazprom bought 72.633 percent of the oil company Sibneft for $13.01 billion. Sibneft was renamed Gazprom Neft. The purchase was aided by a $12 billion loan. Gazprom became Russia's largest company. On the day of the deal the company worth was valued at £69.7 billion.
In July 2006, On Gas Export was enacted with a nearly unanimous vote from the State Duma. This law gave Gazprom the exclusive right to export natural gas from Russia. In December 2006, Gazprom signed an agreement with Royal Dutch Shell, Mitsui and Mitsubishi, to take over fifty percent plus one share of 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 Government of Russia questioned BP's right to export gas from Russia.
On 1 August 2007, Gazprom's Sergey Kuprianov threatened Belarus with the stoppage of their gas flow if the latter failed to pay off their debts, and if so, they would experience a 300% price increase. Two days later, he saw significant progress towards payment, and he expected to be paid by the following week.
On 23 June 2007, the governments of Russia and Italy signed a memorandum of understanding towards a joint venture between Gazprom and Eni SpA to construct a 558-mile gas pipeline to carry gas per year from Russia to Europe. This South Stream pipeline would extend under the Black Sea to Bulgaria with a south fork to Italy and a north fork to Hungary.
On 18 December 2007, Frank-Walter Steinmeier and Dmitry Medvedev signed an agreement on behalf of BASF to exploit another gas field. At the time, German demand was 40% covered by Russian supply. Some German academics warned that Germany had become too dependent on Russia, but Steinmeier, citing the new Ostpolitik, disregarded them.
On 11 February 2008, Kuprianov threatened Ukraine with a halt to the flow; in January 2009, the threat was carried out, marking the beginning of the 2009 Russia–Ukraine gas dispute. BASF's Jürgen Hambrecht was concerned about the reliability of his firm's supply, but Miller assuaged his worries in a phone call, and the Europeans did nothing to change course for more than a decade.
On 1 December 2014, during a visit to Turkey, Putin said the SouthStream project would not proceed and 63 billion cubic metres per year of gas would be shipped to Turkey instead of Bulgaria. Bulgaria was being sued by the European Union for signing a contract with Russia, which was not aligned with European Union regulations. The president of Bulgaria, Rosen Plevneliev, pressured the European Union and Russia to resolve the matter quickly.
Continual rise
On 4 September 2012, the European Commission announced an anti-trust investigation into Gazprom's activities. This was based on "concerns that Gazprom may be abusing its dominant market position in upstream gas supply markets." In late November 2013, Gazprom expanded its media interests by acquiring Profmedia from Vladimir Potanin.On 21 May 2014, in Shanghai, Gazprom and the China National Petroleum Corporation made a contract worth $400 billion over thirty years. The contract was for Gazprom to deliver 38 billion cubic meters of natural gas per year to China beginning in 2018. In August 2014, construction began with pipes for the Power of Siberia pipeline delivered to Lensk, Yakutia. Russia will start supplying natural gas to China through the Power of Siberia pipeline on 20 December 2019 as part of the two countries' $400 billion energy pact. Beijing and Moscow are now negotiating over a second Far Eastern gas pipeline.
In June 2014, Gazprom negotiated with the International Petroleum Investment Company over a 24.9 percent stake in the Austrian oil and gas firm OMV. In July 2014, Gazprom acquired Central Partnership, one of the largest film distributors in Russia.
In September 2015, the Nord Stream 2 contracts were signed, and by July 2021, the pipeline was commissioned.