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Last Updated: Jun 30, 2009 - 8:14:21 AM |
Russian energy super-giant Gazprom has taken severe blows in the
still-deepening recession, and the worst setbacks have happened in its
most profitable market - the European Union. Various assessments show
that the volume of its export to Europe shrunk by 35-40 percent in the
first four months of this year, and consequently its market share fell
from 31 percent to 16 percent, while the forecast for export revenues
in 2009 is some 40 percent below the previous year (Kommersant, June
25). Nevertheless, at the annual meeting last week Gazprom's CEO
Aleksei Miller, confidently asserted that the lowest point of the
decline had passed (www.gazeta.ru, RIA-Novosti, June 26). He dismissed
the criticism over inflexible price policy and predicted that E.U.
consumers would resume their normal demand for Russian gas, while the
market expectations for the price of oil in 2010 shifted, in his
opinion, towards the benchmark of $100 per barrel.
Falling revenues determined, nevertheless, some changes in Gazprom's
guidelines, one of which involved cutting the dividends for 2008 by as
much as 85 percent, which essentially means less money for the state
budget -since the government is the majority shareholder (Vedomosti,
June 25). Another alteration is the reduction of the investment
program, perhaps by as much as 30-35 percent, but on that few details
are released. Production plans for the huge Bovanenkovskoe field has
been corrected towards the end of 2012, but Miller confirmed that the
Shtokman project remained on track (RIA-Novosti, June 26; Kommersant,
June 17). He also insisted that the South Stream pipeline faced no
delays and would carry up to 35 percent of Russian gas export to Europe
after 2015. In reality, however, Shtokman most probably will need
re-scheduling towards 2015, while the prospects for the South Stream
remain very uncertain.
One person who was noticeably absent from the "united-we-stand"
gathering was Prime Minister Vladimir Putin, who is known for treating
Gazprom's business very much like his own. His presence was strongly
felt in the re-appointments of his loyal ally Miller as well as his
more recent protégé Deputy Prime Minister Viktor Zubkov as the chairmen
of the board and even in the appearance of a new "independent" in
Gazprom's list of directors - Valery Musin, a professor of law from St.
Petersburg University and Putin's former teacher (www.newsru.com, June
26). Putin has clearly not lost interest in gas matters, as shown by
his meeting with Total's CEO Christophe de Margerie, who spared no
praise for Putin's "instructions" about doing business in Russia and
was duly rewarded with a contract for the joint development of a medium
size gas field in western Siberia (Kommersant, June 25).
Duties of prime ministers are certainly complex, but few apart from
Putin have taken to making blitz appearances in unexpected places and
performing small miracles by reviving paralyzed plants. It started in
the small town of Pikalevo, Leningrad oblast earlier this month where
TV crews arrived just in time to show Putin stepping out of the
helicopter, making a brief tour around the empty enterprises and
forcing the owners to strike a deal to re-start production, not even
leaving them the pen with which the contract was signed as a souvenir
(Nezavisimaya Gazeta, June 11). Then came the visit to Barnaul where
the prime minister inspected the foundation of a new medical center,
but the mere fact of his presence in Altai krai was enough to resolve
the labor conflict at the Rubtsovsk tractor plant that suddenly saw
demand from new customers (Kommersant, June 20). After the visit to
Ilya Glazunov's personal art gallery where the artist was eagerly
attentive to the prime-ministerial advice, some commentators started to
worry about Putin's connection with reality (Ezhednevny Zhurnal, June
16). Last week he paid a surprise visit to a super-market in Moscow and
expressed dissatisfaction with meat prices, accepting reassurances that
they would be immediately revised down (Vremya Novostei, June 25). Yuri
Kobaladze, the executive director of the company that owns the chain
(and a former general from the Foreign Intelligence Service) had the
nerve to clarify later that it was only light hearted, but July sales
were nevertheless duly announced (Moscow Echo, June 25).
The resemblance of this "manual management" to the trademark style of
North Korean "great-and-dear" leaders is more than a little amusing
(www.grani.ru, June 26). The public relations effect from such
attention to local problems is inevitably short-term, but it creates an
increasing demand for quick fixes of such complex problems as, for
instance, the stagnation of the "mono-cities" built around one or
several industrial enterprises (Rossiyskaya Gazeta, June 26). The
simple proposition that the depth of economic decline requires serious
reforms in the overloaded system of bureaucratic rent-extraction from
every business activity is not present in the recently revised
anti-crisis program. The "ideology" of this plan boils down to the
expectation that rising oil prices will restart the growth engine that
worked so wonderfully during Putin's presidency, while the hands-on
tackling of some local situations will help in defusing public protests.
Gazprom is both a tool and a victim of this "it-will-pass" policy that
has already transformed the crisis into stagflation. Putin's
micro-management of the company's activities is never advertised, but
his hand is unmistakable in the brinksmanship tactics that defines the
development of parallel gas conflicts with Ukraine and Belarus.
Compromises in these quarrels are always only a means toward the end of
denying them any independent say in gas matters. Putin quite sincerely
does not see how this tough behavior damages Gazprom's reputation in
Europe, much the same way as he cannot grasp the logic of the
diminishing effectiveness of performance by this overgrown corporate
behemoth under his enlightened guidance. Gazprom is allowed to reduce
its contributions to the state budget and is granted permission to
increase prices for domestic consumers despite their diminishing
incomes, its every acquisition or investment in Europe is backed by all
the necessary foreign policy resources - and it is still in far more
trouble than its glossy annual report admits. Every crisis brings
reinvigoration to businesses that can learn, but Putin remains adamant
that his course has always been faultless.
Source:Ocnus.net 2009
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