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Coordinates: 55°39′31″N 37°33′23″E

Gazprom JSC
Газпром OAO
Type Public (OAO)
Traded as
Industry Oil and gas
Founded 1989
Headquarters Moscow, Russia
Key people Viktor Zubkov (Chairman)
Alexei Miller (Vice-Chairman andCEO)
Products Petroleum, natural gas, and other petrochemicals
Services Gas pipeline transport
Revenue Increase US$ 153.0 billion (2012)[1][2]
Net income Decrease US$ 38.7 billion (2012)[1][2]
Owners Russian Government (50.01%)
Employees 393,000
Subsidiaries List of subsidiaries

Gazprom headquarters in Moscow

Open Joint Stock Company Gazprom (Russian: Открытое Акционерное Общество «Газпром», abbreviated OAO Gazprom, Russian: ОАО «Газпром», IPA: [ɡɐsˈprom]) is the largest extractor of natural gas in the world and one of the world’s largest companies. Its name is a contraction of the Russian words Gazovaya Promyshlennost (Russian:газовая промышленность – gas industry). Its headquarters are in Moscow.

Gazprom was created in 1989 when the Soviet Ministry of Gas Industry converted to a corporation, retaining all its assets. The company was later partly privatised, although the Russian government currently holds a majority stake. In 2011, the company produced about 513.2 billion cubic metres (18.12 trillion cubic feet) of natural gas, amounting to more than 17% of worldwide gas production. In addition, Gazprom produced about 32.3 million tons of crude oil and nearly 12.1 million tons of gas condensate. Gazprom’s activities accounted for 8% of Russia’s gross domestic product in 2011.

Gazprom’s major production fields are located around the Gulf of Ob in Western Siberia, and the Yamal Peninsula is expected to become the company’s main gas producing region in the future. Gazprom possesses the largest gas transport system in the world, with approximately 158,200 kilometres of gas trunk lines. Major new pipeline projects include Nord Stream and South Stream. The company has a number of subsidiaries in various industrial sectors, including finance, media and aviation, as well as majority stakes in various companies.


1989–1992: Inception

The Soviet Union created a separate gas industry in 1943 during World War II. In 1965, it centralized gas exploration, development, and distribution within the Ministry of Gas Industry. Large natural gas reserves discovered in Siberia and the Ural and Volga regions in the 1970s and 1980s were the basis for the Soviet Union’s becoming a major gas producer in the world. [3]

In August 1989, under the leadership of the Minister Viktor Chernomyrdin, the Ministry of Gas Industry was reconfigured as State Gas Concern Gazprom, which became the country’s first state-corporate enterprise. The company was still controlled by the state, but it exercised control through shares of stock, 100% of which were owned by the state.[4][5]

When the Soviet Union dissolved in late 1991, assets of the former Soviet state in the gas sector were transferred to newly established national companies, such asUkrgazprom and Turkmengazprom.[6] Gazprom kept assets located in the territory of Russia, and was able to secure a monopoly in the gas sector. Assets in the oil industry, on the other hand, were divided among several companies.[5]

1993–1997: Privatisation

Gazprom’s political influence increased significantly after the new Russian President Boris Yeltsin appointed the company’s chairman Chernomyrdin as his Prime Minister in December 1992. Rem Viakhirev took Chernomyrdin’s place as Chairman both of the Board of Directors and of the Managing Committee.[5]

The new government was eager to introduce economic reforms and began to privatize Gazprom. Following the Decree of the President of the Russian Federationof 5 November 1992 and the Resolution of the Government of Russia of 17 February 1993, the organization became a joint-stock company and started to distributeshares under the voucher method: every Russian citizen received vouchers to purchase shares of formerly state-owned companies. By 1994, 33% of the Gazprom’s shares had been bought by 747,000 members of the public, mostly in exchange for the vouchers. 15% of the stock was also purchased and allocated to Gazprom employees. The state retained 40% of the shares, but the amount was gradually lowered to 38%.[5] Trading of Gazprom’s shares was heavily regulated, and the by-laws of the company prohibited foreigners from owning more than 9% of the shares.

Gazprom slowly established credibility in the western capital markets with an offering of one percent of its equity to foreigners in October 1996 in the form of Global Depository Receipts and a successful large bond issue of US$2.5 billion in 1997.

1998–2000: Tax evasion and asset-stripping

As the Prime Minister of Russia, Chernomyrdin ensured that the state did not closely regulate Gazprom. The company evaded taxes on a large scale, and the state received little money in the form of dividends. The management and board members launched a massive asset-stripping, and Gazprom’s property was parceled out to them and their relatives. Some of the largest stripped assets were transferred to the controversial gas-trading company Itera. Chernomyrdin and Gazprom’s CEORem Viakhirev were leading figures in the process.[7]

In March 1998, for reasons unrelated to Gazprom, Yeltsin fired Chernomyrdin from his position as Prime Minister.[8] On 30 June 1998 Chernomyrdin returned to the company as the chairman of the board of directors.

2000–2003: The Putin reforms

Gazprom’s situation changed abruptly in June 2000, when Vladimir Putin became the President of Russia. Putin launched a campaign to rein in the oligarchs. Per his policy of the so-called national champions, he strengthened state control in strategic companies.[9] He launched an attack against what he saw as mismanagement and personal pilfering of state assets. After coming to power, Putin immediately fired Chernomyrdin from his position as the chairman of the company’s board and used the stock owned by the state to vote out Vyakhirev. The two men were replaced by Dmitry Medvedev and Alexei Miller, who had previously worked with Putin in Saint Petersburg.[9] Putin’s actions were aided by shareholder activism of Hermitage CEO William Browder and former Russian finance minister Boris Fyodorov. Miller and Medvedev were assigned the task to stop the asset-stripping, and also to regain lost possessions. By denying Itera access to Gazprom’s pipelines, Miller almost forced Itera to declare bankruptcy. As a result, Itera’s management agreed to sell the stolen assets back to Gazprom.[10]

2005–2006: Establishment of government control

In June 2005, Gazprombank, Gazpromivest Holding, Gazfond and Gazprom Finance B. V., subsidiaries of Gazprom, agreed to sell a 10.7399% share to the state-owned company Rosneftegaz for $7 billion, at what some western analysts viewed as an undervalued price.[11] The sale was to be completed by 25 December 2005, which, combined with the 38% share of the State Property Committee, gave the Russian government control over the company.[12]

As the Russian state had acquired a controlling share, it removed the 20% restriction on foreign investment in Gazprom, and the company became fully open to foreign investors.[13][14]

On 20 July 2006, the Federal LawOn Gas Export,” granting Gazprom exclusive right to export natural gas was published.[15] It was approved nearly unanimously by the State Duma on 5 July, by the upper house, the Federation Council on 7 July and signed into law by President Vladimir Putin on 18 July.[16][17][18]

2007 and later

On 4 September 2012, the European Commission said it had launched an anti-trust case against Gazprom. The Brussels-based competition watchdog said it opened the formal legal probe based on “concerns that Gazprom may be abusing its dominant market position in upstream gas supply markets.”[19]

On 21 May 2014, A 30 year deal between Gazprom and China‘s China National Petroleum Corporation (CNPC) which was 10 years in the making is estimated worth $400 billion, The agreement which was signed at a summit in Shanghai is expected to deliver some 38 billion cubic meters of natural gas a year eastward toChina‘s burgeoning economy, which will start around 2018.[20][21] Construction has already begun, with pipes for the Power of Siberia pipeline delivered to Lensk, Yakutia in August 2014.[22]

Notable acquisitions

In April 2001 Gazprom took over NTV, Russia’s only nationwide state-independent television station held by the oligarch Vladimir Gusinsky’s Media-Most holding.[23][24][25] In 2002 the Gazprom subsidiary Gazprom Media acquired all of Gusinsky’s shares in the companies held by Media-Most.[26]

In September 2005, Gazprom bought 72.633% of the oil company Sibneft (now Gazprom Neft) for $13.01 billion, aided by a $12 billion loan, which consolidated Gazprom’s position as a global energy giant and Russia’s biggest company.[27] On the day of the deal the company was worth £69.7 billion/US$123.2 billion.

In December 2006, Gazprom signed an agreement with Royal Dutch Shell, Mitsui and Mitsubishi, taking over a half plus one share in Sakhalin Energy.[28]

In June 2007, TNK-BP, a subsidiary of BP plc, agreed to sell its stake in Kovykta field in Siberia to Gazprom after the Russian authorities questioned BP’s right to export the gas to markets outside Russia.[29][30][31][32] On 23 June 2007, the governments of Russia and Italy signed a memorandum of understanding to cooperate on a joint venture between Gazprom and Eni SpA to construct a 558-mile (900 km) long gas pipeline to carry 1.05 trillion cubic feet (30 km3) of gas per year from Russia to Europe. The South Stream pipeline would extend under the Black Sea to Bulgaria with a south fork extending to Italy and a north fork to Hungary. On a visit to Turkey on 1 December, Putin said the project was over and that the 63 billion cubic metres per year (bcm/y) of gas would be shipped to Turkey instead of Bulgaria, which according to the Russian leader, had obstructed the project. Bulgaria was in a process of being sued by the EU for signing contract with Russia, which was not aligned with EU regulation. Moreover, the EU country didn’t have any contract for the profits but just for the costs according to the Bulgarian President Rosen Plevneliev, who commented that EU and Russia have to sign this contract in a speech on the next day.[33][34][35] [36] [37]

At the end of November 2013, Gazprom expanded its media interests with the acquisition of Profmedia from Russian metals tycoon Vladimir Potanin.[38]

In June 2014, Gazprom was in negotiations with a 24.9 percent stake in the Austrian oil and gas firm OMV, held by Abu Dhabi’s International Petroleum Investment Co (IPIC).[39]



In 2011, the Gazprom group produced 513.17 billion cubic metres (18.122 trillion cubic feet) of natural gas. This amounted to 17% of the worldwide and 83% of Russian production. Of this amount, the Yamburg subsidiary produced 41%, Urengoy 23.6%, Nadym 10.9%, Noyabrsk 9.3% and others 15.2%. In addition, the company produced 32.28 million tons of oil and 12.07 million tons of gas condensate.[40][41][42]

Major part of Gazprom’s current production fields are located in the Nadym-Pur-Taz region (near the Gulf of Ob) in Yamalo-Nenets Autonomous Okrug in WesternSiberia. The three largest ones — Medvezhe, Urengoy and Yamburg— have been sustaining Russian gas production for 20 years. They are now in a declining state of production, with levels falling by 20–25 bcm per year.[43][44] Gazprom’s fourth large field, Zaporliarnoe was able to increase production until 2004, which offset the decline in the three largest fields.[43] From 2004, the company has been able to sustain its overall production levels by launching production from new smaller fields and by purchasing production assets from other companies.[43][45]

Crude oil production comes mostly through the subsidiary Gazprom Neft, which was previously called Sibneft. Gazprom bought 75% of the company’s shares in 2005 for $13.1 billion.[46]

billion cubic metres 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Natural gas 552.5 555.0 556.0 548.6 549.7 461.5 508.6 513.2 487.0 487.4
Source: Gazprom in figures 2004-2008, 2007-2011 and 2009-2013.[40][41][42]
million tons 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Crude oil 0.9 9.5 34.0 34.0 32.0 31.6 32.0 32.3 33.3 33.8
Condensate 11.1 11.5 11.4 11.3 10.9 10.1 11.3 12.1 12.9 14.7
Source: Gazprom in figures 2004-2008, 2007-2011 and 2009-2013.[40][41][42]

Imports from Central Asia[edit]

Imports from Central Asia have become very important to Gazprom’s supply balance.[43] In 2007, Gazprom imported a total of 60.7 billion cubic metres (2.14 trillion cubic feet) from Central Asia: 42.6 billion cubic metres (1.50 trillion cubic feet) from Turkmenistan, 8.5 billion cubic metres (300 billion cubic feet) from Kazakhstan and 9.6 billion cubic metres (340 billion cubic feet) from Uzbekistan.[43] In particular, 75% of all Turkmen gas exports go to Gazprom, which in turn exports the gas to Ukraine. The price of the Central Asian gas received by Gazprom ranged from $130/mcm to $180/mcm in 2008. Gazprom has agreed that prices will rise to European levels in the near future.[43]


The company’s proved and probable reserves under PRMS international standards in 2011 were 22.844 trillion cubic metres (806.7 trillion cubic feet) of natural gas, amounting to 18.3% of the world’s proved natural gas reserves; 1.216 billion tons of crude oil and 757.8 billion tons of gas condensate.[40][41] 73.2% of Gazprom’s natural gas reserves were located in the Urals Federal District, 14.3% in the Arctic shelf, 7.8% in the Southern Federal District, 2.3% in the Volga Federal District, 1.2% in the Siberian Federal District, and 1.2% in other territories.[40][41]

trillion cubic metres 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Natural gas 20.90 20.66 20.73 20.84 21.28 21.95 22.52 22.84 23.37 23.24
Source: Gazprom in figures 2004-2008, 2007-2011 and 2009-2013.[40][41][42]

Development and exploration

Location of the Shtokman gas field

Since the production in Gazprom’s current main fields of activity is declining, new fields need to be launched in the next few years in order for overall production levels to be sustained.[43][45] Recognizing this, the company has been investing heavily in major projects, with overall yearly investment reaching about 480 billion rubles ($20 billion) in recent years.[43] Nearly 37% of Gazprom’s reserves are located in Yamal Peninsula and in the Barents Sea, and access needs to be gained to those reserves before they can begin production.[43]

Blue Stream Pipeline

One of Gazprom’s key projects is the Blue Stream Pipeline.[47] The Blue Stream Pipeline delivers natural gas to Turkey directly through the Black Sea; this is advantageous for Turkey because it does not have to rely on third party nations allowing the pipeline to be used. The agreement was signed between Turkey and Russia in 1997, and construction began in 2000 when the first joint was welded. Currently, the pipeline transports 16 billion cubic meters each year.[47]

Yamal Peninsula

Main article: Yamal project

Gazprom’s main solution to the decline of current fields is the development of new fields located in the Yamal Peninsula, which is expected to become the company’s main gas-producing region in the future.[44] The explored reserves there amount to over 10 trillion cubic metres of natural gas and over 500 million tons of oil and gas condensate. About 60% of these is located in major areas such as Bovanenkovo, Kharasavey and Novoportovo. The Bovanenkovo field is expected to become the first one commissioned, starting production in 2011. The natural gas production capacity of the Bovanenkovo field is projected as 115 billion cubic metres per annum (4.1 trillion cubic feet per annum), with the potential to increase to 140 billion cubic metres per annum (4.9 trillion cubic feet per annum).[40] The planned 2011 start date has been met with skepticism by analysts. The main obstacle for the deadline is the lead time necessary to mobilize materials to drill development wells, and especially the technically challenging construction of Bovanenkovo–Ukhta pipeline across Baydaratskaya Bay, which will connect the Bovanenkovo field to Gazprom’s gas transmission network. It has been predicted that failure to launch production in Yamal in 2011 will lead to a decline in Gazprom’s overall production capability. Even if the field is launched in time, this will only enable the company to sustain current levels, but not to increase general production.[43]

Shtokman field

Main article: Shtokman field

Gazprom’s other major future source is the Shtokman field—one of the world’s largest natural gas fields. It is an enormous area located offshore in the central part of the Barents Sea, 650 kilometres (400 mi) northeast of the city of Murmansk and 1,000 kilometres (620 mi) west of the Yamal Peninsula. The field is estimated to contain up to 3.7 trillion cubic metres (130 trillion cubic feet) of gas.[43] Potential production is 71 billion cubic metres per annum (2.5 trillion cubic feet per annum) in the initial phases, with a potential of increase to 95 billion cubic metres per annum (3.4 trillion cubic feet per annum).[40] Gazprom, French Total and NorwegianStatoil have created a joint company Shtokman Development AG for development of the phase 1 of the field.[48][49][50] The production is expected to start in 2015.[51]

Arctic shelf/Khanty-Mansiysk Autonomous Area

The Arctic shelf has been a recent focus of Shell and Gazprom. On 8 April 2013 in Amsterdam Alexey Miller, Chairman of the Gazprom Management Committee and Jorma Ollila, Chairman of the Board of Directors of Royal Dutch Shell signed in the presence of Russian President Vladimir Putin and Dutch Prime Minister Mark Rutte a Memorandum outlining the principles of cooperation within hydrocarbons exploration and development in Russia’s Arctic shelf and a section of deep-water shelf abroad. [52]

Other options

Another large-scale production option would be the development of the Kovykta field in Eastern Siberia, but this has been seen as a last resort alternative due to its cost.[43] In the short term, Gazprom plans to increase production to 570 bcm in 2010 by developing the following fields in the Nadym-Pur-Taz region: Zapolyarnoye, Pestsovoe, Kharvutinskoe, Yuzhno-Russkoe, Zapadno-Pestsovoe, the Nydinskaya part of the Medvezhe field and Urengoy Achimovskoe.[43]


In Russia, Gazprom carried out 284.9 kilometres (177.0 mi) of exploration well drilling; 124,000 kilometres (77,000 mi) of 2D seismic survey and 6,600 square kilometres (2,500 sq mi) of 3D seismic survey in 2008. As a result, gas reserves grew by 583.4 billion cubic metres (20.60 trillion cubic feet), while oil and condensate reserves grew by 61 million tons.

Gazprom also carries out prospecting and exploration in foreign countries such as India, Algeria, Venezuela, Vietnam, Libya, Kazakhstan, Uzbekistan, Kyrgyzstanand Tajikistan.[40]

Environmental impact

In 2011 Gazprom reported that it had improved key environmental indicators. Compared to 2010, air emissions had been decreased by 3%, production waste by 11% and water consumption by 7.5%, mainly by using advanced technologies. One method is recycling drilling waste into construction material.[53] In 2011 Gazprom environmental management system was successfully certified under ISO 14001:2004.[citation needed]


Natural gas pipelines from Russia to Europe

Gazprom’s Unified Gas Supply System (UGSS) includes 158,200 kilometres (98,300 mi) of gas trunklines and branches and 218 compressor stations with a 41.4 GW capacity. The UGSS is the largest gas transmission system in the world.[54] In 2008, the transportation system received 714.3 billion cubic metres (25.23 trillion cubic feet) of gas.[40] The UGSS is currently at the superior limit of its capacity.[54]

Major transmission projects include the Nord Stream and South Stream pipelines, as well as several pipelines inside Russia.[40]


In 2006, Gazprom sold 316 billion cubic metres (11.2 trillion cubic feet) of gas to domestic customers in Russia; 162 billion cubic metres (5.7 trillion cubic feet) to rest of Europe and 101 billion cubic metres (3.6 trillion cubic feet) to CIS countries and the Baltic states.[43] There is a considerable difference in gas prices for these three customer groups. Inside Russia, according to Russian government policy, Gazprom is forced to sell gas at a considerable discount.[citation needed] This is a result of the socialist legacy, according to which energy is a “basic human right.”[citation needed] Consequently, Gazprom receives about 60% of its revenues from its sales to European customers.[55]

The low domestic price has caused problems for the Russian economy, such as overdependency on gas as an energy source and lack of investment in new production fields.[citation needed] Until 2004, Gazprom could only sell gas inside Russia, with a loss. It has also been realized that development of the new high-cost gas fields will not be possible without prices increasing. In 2006, the Russian government decided that domestic gas prices for industrial customers will rise to European netback levels (with tariffs and transmission costs reduced) by 2011. In 2008, average gas price paid by Russian industrial customers was $71/mcm, while households paid $54/mcm. Both prices are expected to rise about 25% in 2009, 25% in 2010, and 40% in 2011.[43] Gazprom’s attempts to bring CIS export prices to European levels have led to several disputes, most seriously with the Ukraine in 2006 and 2009.[citation needed]

Gazprom sales of gas 2004-2008
2004 2005 2006 2007 2008
Volume Price Volume Price Volume Price Volume Price Volume Price
Russia 306 bcm $47/mcm 307 bcm $36/mcm 316 bcm $43/mcm 307 bcm $42/mcm 287 bcm $67/mcm
CIS+Baltic 66 bcm $36.33/mcm 77 bcm $50.02/mcm 101 bcm $76.37/mcm 100 bcm $91.6/mcm 96.5 bcm $118/mcm
Europe 153 bcm $101.61/mcm 156 bcm $140.09/mcm 162 bcm $192.59/mcm 168.5 bcm $185/mcm 184.4 bcm $313/mcm
Prices are excluding VAT and tax and custom duties, mcm means thousand (mega) cubic metre, not million. Sources:[43][56]

Natural gas prices have shown strong fluctuation since the year 2000. Furthermore Gazprom’s sales prices varied largely among their customers. By the end of 2007, the price at the New York NYMEX was 7,53 $ per MMBtu, at 26,4 m³ per MMBTU this means a price of $285 per 1000 Cubic metre. At the same time, based on their respective contracts with Gazprom, customers paid these prices: Germany $250, Poland $290, Ukraine $130 and Russia $49.[57]


Gazprom delivers gas to 25 European countries, the only major exceptions being Spain and Portugal. The vast majority of Russian gas in Europe is sold on long-term 20—25 year contracts, although recently the subsidiary Gazprom Marketing and Trading has been increasingly active in the short-term sales business.[43]

By the end of 2004 Gazprom was the sole gas supplier to at least Bosnia and Herzegovina, Estonia, Finland, Macedonia, Latvia, Lithuania, Moldova, Serbia and Slovakia, and provided 97% of Bulgaria’s gas, 89% of Hungary’s, 86% of Poland’s, nearly three-quarters of the Czech Republic’s, 67% of Turkey’s, 65% of Austria’s, about 40% of Romania’s, 36% of Germany’s, 27% of Italy’s, and 25% of France’s.[58][59] The European Union as a whole gets about 25 percent of its gas supplies from Gazprom.[60][61]

According to The Economist in 2014 Europe was the source of 40 % of Gazprom’s revenue. The proportion of Europe’s gas bought in the spot market rose from 15 % in 2008 to 44 % in 2012.[62]

At the G20 summit in September 2013, Gazprom signed an agreement with CNPC that the Henry Hub index would not be used to settle prices for their trades.[63]On 21 May 2014, Putin met with Jinping to negotiate what turned out to be a $400bn deal between Gazprom and CNPC.[64] The contract called for Russia to supply 38 billion cubic meters of gas annually over 30 years, making the price about $350 per thousand cubic meters. In 2013, the average price of Gazprom’s gas in Europe was about $380 per thousand cubic meters.[64] China offered a loan of about $50bn to finance development of the gas fields and the construction of the pipeline by Russia up to the Chinese border, with the Chinese to build the remaining pipeline.[64] The trade is scheduled to begin in 2018.[64] “The gas price formula, as in our other contracts, is pegged to the market of oil and oil products,” said Putin.[64]

Price disputes[edit]

On 1 January 2006, at 10:00 (Moscow time), during the Russia-Ukraine gas dispute, Gazprom ceased the supply of gas to the Ukrainian market, calling on Ukraine’s government to pay increases that partially reflected the global increases in fuel prices. During the night from 3 to 4 January 2006, Naftogas of Ukraine and Gazprom negotiated a deal that temporarily[65] resolved the long-standing gas price conflict between Russia and Ukraine.

On 3 April 2006, during the Russia-Belarus energy dispute, Gazprom indicated it would triple the price of natural gas sold to Belarus after 31 December 2006. In December 2006m Gazprom threatened a cut-off of supplies to Belarus at 10 am Moscow time on 1 January 2007, unless it agrees to raise the price it pays for the gas from $47 to $200 per 1,000 cubic metres or to cede control over its distribution network.[66] Some analysts suggested Moscow was penalising Alexander Lukashenko, the President of Belarus, for not delivering on pledges of closer integration with Russia,[67] while others noted that other friendly countries like Armenia were paying as much for their gas as Belarus would with the new price levels.[68]

Gazprom later requested a price of $105,[69] yet Belarus still refused the agreement. Belarus responded that if supplies were cut, it would deny Gazprom access to its pipelines, which would hurt gas transportation to Europe.[70] However, on 1 January 2007, just a few hours before the deadline, Belarus and Gazprom signed a last-minute agreement. Under the agreement, Belarus undertook to pay $100 per 1,000 cubic metre in 2007. The agreement also allowed Gazprom to purchase 50% of the shares in Beltransgaz, the Belarusian pipeline network.[71] Immediately following the signing of this agreement, Belarus declared a $42/ton transportation tax on Russian oil travelling through the Gazprom pipelines crossing its territory.

After a three day crisis in the beginning of March 2008 where gas supplies to Ukraine were halved, Gazprom agreed on 13 March 2008 to supply the Ukraine with gas for the rest of the year in a deal that cut out intermediary companies, a move it hoped would end payment disputes. Ukraine was to pay $315 (£115) per 1,000 cubic metres of gas supplied in January and February 2008, and $179.50 per 1,000 cubic metres for gas between March and December.[72]

In November 2008, Gazprom and Ukraine escalated their dispute. This resulted in both Gazprom and Ukraine’s Naftogaz cutting gas supplies to part of Europe in 2009.[citation needed]

On 1 April 2014, Gazprom increased the gas price charged to Ukraine from $268.50 to $385.50 (£231.00) per 1,000 cubic metres, the chief executive Alexei Millersaid. He added that Ukraine’s unpaid gas bills to Russia stood at $1.7bn (£1.02bn).[73]

On 30 October 2014, It was announced that Russia had agreed to resume gas supplies to Ukraine over the winter in a deal brokered by the European Union.[74]

Company characteristics

Gazprom is a vertically integrated company which dominates both upstream and downstream activities. It owns all main gas-processing facilities in Russia, operates the country’s high pressure pipelines and has (since 2006) a legal export monopoly. “Gazprom’s strategic goal is to become a leader among global energy companies by developing new markets, diversifying business activities and securing the reliability of supplies.”[75] Other natural gas producers, such as Russia’s second largest gas company Novatek, are forced to use Gazprom’s facilities for transmission and processing.[55]

At the end of 2008, Gazprom had 221,300 employees in its major gas production, transportation, underground storage and processing subsidiaries. Of this, 9.5% were management, 22.9% were specialists, 63.4% were workers and 4.2% were other employees.[40] Its headquarters are in the Cheryomushki District, South-Western Administrative Okrug, Moscow.[76]

Gazprom belongs to the so-called national champions; a concept advocated by Russian president Vladimir Putin, in which large companies in strategic sectors are expected not only to seek profit, but also to advance Russia’s national interests. For example, Gazprom sells gas inside Russia considerably under the global market price as a form of subsidy to the public.[5] However, this lower price also allows Gazprom to undercut competition while presenting an image of advancing Russia’s interests.[citation needed]

The company also controls assets in banking, insurance, media, construction and agriculture.

In 2008, Gazprom’s activities made up 10% of the Russian GDP.[40]


As of 29 December 2006, Gazprom’s main shareholders were:[77]

The Russian government controls 50.002% of shares in Gazprom through Rosimushchestvo, Rosneftegaz, and Rosgazifikatsiya.[77]


Gazprom has several hundred subsidiaries in Russia and abroad owned and controlled directly or indirectly.


Gazprom Headquarters in Moscow

Board of directors

Gazprom’s Board of Directors as of June 2008:[78]

Former members of the board:

Management committee

Gazprom’s management committee as of December 2006:[79]

  • Alexei Miller (Chairman, Deputy Chairman of the Board, CEO, Chairman of Gazprombank, former Deputy Minister of Energy of Russia, member since 2001)
  • Alexander Ananenkov (Deputy Chairman, Deputy Chairman of the Board, Gazprom shareholder, member since 17 December 2001)
  • Valery Golubev (Deputy Chairman, Head of the Department for Construction and Investment, former Head of the Vasileostrovsky District, former member of theFederation Council of Russia, member since 18 April 2003)
  • Alexander Kozlov (Deputy Chairman, member since 18 March 2005)
  • Andrey Kruglov (Deputy Chairman, Head of the Department for Finance and Economics, member since 2002)
  • Alexander Medvedev (Deputy Chairman, Deputy Chairman of the Board, Director General of Gazprom Export, President of Kontinental Hockey League, member of the Coordination Committee of RosUkrEnergo, member since 2002)
  • Mikhail Sereda (Deputy Chairman, Head of Administration, Deputy Chairman of Gazprombank, member since 28 September 2004)
  • Sergei Ushakov (Deputy Chairman, member since 18 April 2003)
  • Elena Vasilyeva (Deputy Chairman, Chief Accountant, member since 2001)
  • Bogdan Budzulyak (Head of the Department of Gas Transportation, Underground Storage and Utilization, member since 1989)
  • Nikolai Dubik (Head of Legal Department, member since 2008)
  • Konstantin Chuychenko (Head of the Control Department of Russia, presidential aide to Dmitry Medvedev, former chairman of Gazprom Media, executive director of RosUkrEnergo, former KGB officer, member since 2002)
  • Viktor Ilyushin (Head of the Department of Relationships with Regional Authorities of the Russian Federation, member since 1997)
  • Olga Pavlova (Head of the Department of Asset Management and Corporate Relations, member since 2004)
  • Vasiliy Podyuk (Head of the Department of Gas, Gas Condensate and Oil Production, member since 1997)
  • Vlada Rusakova (Head of the Department of Strategic Development, member since 5 September 2003)
  • Kirill Seleznev (Head of the Department of Marketing and Processing of Gas and Liquid Hydrocarbons, member since 27 September 2002, Director-General of Mezhregiongaz)

Former members of the management committee:

  • Nikolai Guslisty (1997 – 18 March 2005)
  • Yury Komarov (former Director General and former Acting Director General of Gazprom Export, former head of development of the Shtokman Field, former Representative of Russia to the Asia-Pacific Economic Cooperation forum) (8 August 2003 – 12 May 2005)
  • Alexander Ryazanov (former CEO of Surgut Gas Processing Factory, former First Deputy Chairman of the Board, former President of Sibneft, former deputy (i.e. member) of the State Duma) (2001 – 15 November 2006)
  • Mikhail Akselrod (until 18 March 2005)
  • Boris Yurlov (until 16 April 2004)
  • Nikolai Gornovsky (until 18 April 2003)
  • Vladimir Leviev (until 18 April 2003)
  • Sergei Lukash (until 18 April 2003)
  • Vladimir Rezunenko (until 26 June 2003)
  • Alexander Krasnenkov (until 8 August 2003)


Shares of the members of the Board of Directors and Management Committee (as of 5 September 2005):[80]

Others have no share.

Sports sponsorships

Gazprom is the owner and sponsor of Russian Premier League football club Zenit St. Petersburg.

On 1 January 2007, Gazprom also became the sponsor of the German Bundesliga club Schalke 04 paying up to €25 million a year for the privilege. On 23 November 2009, the partnership was extended for a further 5 years. The sponsorship is worth $150m (USD) spread over the 5 years.[81]

On 9 July 2010, Gazprom became sponsor of Serbian SuperLiga football club Red Star Belgrade.

Gazprom by 2010 Gold Partner of the Russian professional cycling team, Team Katusha, in alliance with Itera, and Russian Technologies (Rostekhnologii).[clarification needed]

On 9 July 2012, Gazprom became sponsor of UEFA Champions League and UEFA Super Cup for three season until 2015[82]

On 17 July 2012, Gazprom also became the official Global Energy partner of the UEFA Champions League 2012 winners Chelsea for 3 seasons, lasting until 2015.[83]


Yukos Oil Fraud

Yuganskneftegaz was the core production subsidiary of Yukos Oil Company, which was previously run by Russian businessman Mikhail Khodorkovsky. In 2003, the Russian tax authorities charged Yukos and Khodorkovsky with large-scale tax evasion. On 14 April 2004, Yukos was presented with a bill for over US $35 bn in back taxes and a demand to pay the entire bill the same day. Requests by Yukos to defer payment, allow payment by installments or to discharge the debt by sale of peripheral assets, including its shareholding in the Sibneft oil company, were also refused. Since Yukos was both legally and physically unable to pay the entire amount in cash on such short notice, Russian bailiffs froze Yukos’ shares in Yuganskneftegaz.

On 19 November 2004, Russian bailiffs placed a notice in the Russian government newspaper Rossiyskaya gazeta announcing that Yuganskneftegaz would be sold at an auction scheduled to be held 30 days later on 19 December 2004.[84] The conditions for participation in the auction included an advance deposit of US $1.7 bn and prior clearance by the Russian Federal Antimonopoly Service.

In early December, the Russian state-controlled gas monopoly Gazprom submitted an application to participate in the auction through its wholly owned subsidiary,Gazpromneft. Gazpromneft had been created in September 2004 in preparation for a planned merger between Gazprom and state-owned Rosneft.

On 15 December 2004, Yukos filed for a bankruptcy protection in a Houston court, and obtained a temporary injunction prohibiting Gazprom from participating in the auction. On the next day, December 16, a group of Western banks withdrew their financial support for the Gazprom application. On the same day, the previously unknown Baikalfinansgrup applied to participate in the auction.

On 19 December 2004, only two companies appeared for the auction: Gazpromneft and Baikalfinansgrup. Gazpromneft declined to place any offer, thus allowing Baikalfinansgrup to acquire Yuganskneftegaz on its first bid.

Four days later Baikalfinansgrup was acquired by Rosneft. Rosneft later disclosed it its annual financial statement that it had financed the acquisition of Yuganskneftegaz.[85] At the time, Rosneft president Sergey Bogdanchikov was also the CEO of Gazpromneft.[86]

Shortly after the auction, the planned merger between Gazprom and Rosneft merger was called off, and Sergey Bogdanchikov resigned his post as CEO of Gazpromneft.

On 7 February 2006, in response to a question by a Spanish journalist, Russian President Vladimir Putin disclosed that Rosneft had used Baikalfinansgrup as a vehicle to acquire Yuganskneftegaz in order to protect itself against litigation risks.[87]

Gazprom’s oil drilling in the Arctic have drawn protests from environmental groups, particularly Greenpeace. Greenpeace has opposed oil drilling in the Arctic on the grounds that oil drilling would cause damage to the Arctic ecosystem and that there are no safety plans in place to prevent oil spills.[88] In August 2012, Greenpeace had staged protests against the Prirazlomnaya oil platform, the world’s first off-shore Arctic drill site.[89][90]

On 18 September 2013, the Greenpeace vessel MV Arctic Sunrise staged a protest and attempted to board Gazprom’s Prirazlomnaya oil platform, the world’s first off-shore Arctic drill site. Greenpeace stated that the drill site could cause massive disruption to the Arctic ecosystem, which Gazprom denied.[91] In response, after arresting two campaigners attempting to climb the rig,[92] the Russian Coast Guard seized control of the ship via helicopter drop, and arrested thirty Greenpeace activists. Over thirty crew have been arrested and come from sixteen different nationalities. The Arctic Sunrise was also towed by the Russian Coast Guard toMurmansk. The Russian government intended to charge the Greenpeace campaigners with piracy and hooliganism, which carries a maximum penalty of fifteen years of imprisonment, while Greenpeace claimed they were in international waters.[93] The Russian government’s actions generated protests from governments and environmentalists worldwide.[88][94] According to Phil Radford, Executive Director of Greenpeace in the U.S. at the time, the reaction of the Russian coast guard and courts were the “stiffest response that Greenpeace has encountered from a government since the bombing of the Rainbow Warrior in 1985.”[95] The charges of piracy were dropped in October, and 27 of the campaigners were released on bail in November 2013.[96][97]

In May 2014, the first shipment of Arctic oil that Greenpeace had protested arrived at a refinery in the Netherlands. The French company Total bought this cargo despite statements in 2012 about the potential dangers of offshore oil exploration in the region.[98]