When Putin wants money for a sports complex in Orenburg, or a chess academy in Khanty-Mansiysk, or a monument in Yaroslavl or an apartment-house development in Moscow, he calls on Gazprom.
When he needs financing for a political campaign, or a loan on favorable terms for one of his friends, he goes to the same source, Greene said.
He has wielded Gazprom as a blunt weapon against Ukraine, where corruption has provided the company with rich opportunities to assert influence and to manipulate huge amounts of cash. Ukraine’s large storage facilities and its role as a transit nation through which most of Gazprom’s exports flow have given rise to layers upon layers of middlemen who take their cut. The country itself is Gazprom’s biggest foreign buyer and pays a higher price than any other customer. Ukraine’s debt to Gazprom is growing so large that politicians and analysts worry the country will be drawn tightly into Russia’s orbit.
“Putin was very deeply into the affairs of Gazprom, always,” Milov said. How much, for instance, will Russian consumers have to pay for gas, and how much will they be subsidized by the company? Every year, Putin picks the numbers, said Natalia Volchkova, a professor at the New Economic School here.
In doing the president’s bidding, Gazprom officials have practically lost sight of the investment needs of the company — modernization, maintenance and expansion — and of the need to compete. They have been in the money and political power business, not the gas business.
“The individual interests of managers are not aligned with the interests of the organization,” Volchkova said. “Loyalty is more important than efficiency, as in any state company.” Loyalty, that is, to Putin and his system — not to the running of a good company.
Private investors share the doubts about Gazprom: Though the Russian company’s reported profits in 2011 top even those of Exxon Mobil, its stock valuation is about one-quarter that of the American oil giant. Bloomberg calculated in August that Gazprom had fallen out of the top 20 of the world’s largest corporations.
But neither the demands of the market nor of the shareholders can force greater efficiency on Gazprom, Greene said. “There’s only one shareholder who matters.”
Gazprom’s production has been stagnant for years. A huge new $20 billion gas-extraction project in the Barents Sea was put in mothballs this month after Gazprom’s foreign partners — who alone had the expertise to pursue it — dropped out.
Gazprom has spent a decade trying to negotiate a huge deal with China, but with no results so far. The two sides are about 1,000 miles apart on the routing of a new pipeline.
The advent of shale gas in the United States has increased supplies and driven down spot prices worldwide, and Europe can now buy liquefied natural gas from the Middle East at a relatively attractive price. It is also exploring its own shale-gas potential. Customers have been renegotiating contracts, as the Russian giant comes under more pressure. Unlike oil, natural gas until recently was difficult to ship except in pipelines; this gave Gazprom a guaranteed, if partial, monopoly as a gas supplier to Europe.