Gazprom

•What is Gazprom?

–The largest Russian gas extractor provides 20% of the world and 60% of Russian gas needs

–After acquisition of SIBNEFT with $13 billion it became 3rd biggest oil producer

–Owns 150 000km natural gas pipeline system 300 000 employees

–Joint stock company but mostly owned by Russian government

Gazprom

-Internal market

-External market

-Price of Gazprom gas in different markets as of 2006



I wanted to continue on Russian perspective of doing business. As you can see from price map of Gazprom's gas most of Russian consumers are heavily subsidized. Company has been a subject of political instrument against other states, just to mention one is Ukraine.
Since its the major "cash cow" of Russian economy and useful tool in foreign policy Russian government have created unreasonable barriers for foreign investments in field of oil & gas production. Only 1% of its profit goes to R&D.

Most of the people who are running the country assuming that gas is gas and it will be generating cash, but they are not using high oil and gas prices efficiently. Majority of politicians have communist perspective somehow mixed with market economy, but don't want to privatize the oil or gas companies with can be much more efficient in cutting "fats" and not getting involved into politics, attract more foreign investors.

I think in order to grow Gazprom and Russian authorities should take following steps:

•Removal of subsidies and price controls;

•Lowering or elimination of trade and investment barriers;

•Privatization of state-owned industries; and

•Restructuring gas sectors, “unbundling” of natural monopoly activities,
introduction of competition and regulatory reform.

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