Gazprom's Growing Status: A Liberalising Company or a Kremlin-Controlled Behemoth?

Strategic Insights -

Gerhard Schroder's appointment to the board of North European Gas Pipeline, a consortium led by Gazprom, has sparked controversy over the former German Chancellor's conduct. However, what is more significant than Schroder's personal conduct is what his appointment says about Gazprom's growing status as a leading energy supplier in western Europe. With over a quarter of global gas reserves and a market capitalisation expected to exceed $100bn, Gazprom is set to become the dominant player in the European energy market within the next decade.

Key Takeaways:

  • Gazprom's market capitalisation has surpassed $100bn, with its shares becoming increasingly accessible to investors.
  • The company's acquisition of Sibneft, a Russian oil firm, added only 5% to its asset base, highlighting its enormous size and dominance in the energy sector.
  • Gazprom is leading a state-sponsored drive to bring Russia's energy assets back under government control, with President Putin imposing restrictions on foreign ownership of "strategic" oil and gas fields.
  • The company's chief executive, Alexei Miller, has spearheaded Gazprom's growth and expansion into new markets, including liquefied natural gas and exports to China.
  • Gazprom's performance has been marred by inefficient management and a wide portfolio of non-core operations, including holdings in banking, media, and electricity.
  • The company's market capitalisation per barrel of reserves is one of the lowest in the global industry, raising questions about its investment potential.

Statistics:

  • Gazprom's market capitalisation has surpassed $100bn, with its shares becoming increasingly accessible to investors.
  • The company's acquisition of Sibneft added $13.1bn to its asset base, representing a 5% increase.
  • Gazprom's staff costs rose by more than 30% last year, whereas net revenues increased by only 24%.
  • The company produces 550bn cubic meters of gas annually, with 400bn sold to Russian buyers at low, state-regulated prices.
  • Gazprom's exports to Europe are worth $30bn annually, making it a significant source of profits for the company.

Sources:

  • "Gazprom unveils Schroder as new recruit" by Conal Walsh, IT (no date provided)
  • "Gazprom's Schroder appointment sparks controversy" (no author, no date provided)
  • Article by William Browder, chief executive of Hermitage Capital Management (no date provided)
  • Interview with Stephen O'Sullivan, analyst at UFG, the Moscow-based investment bank (no date provided)
  • "Gazprom's Schroder appointment sparks debate over company's liberalisation" (no author, no date provided)