Russia won’t break up Gazprom

Russian Gas Facility file photo

(Business New Europe – bne.eu – May 21, 2013) The Russian government has no plans to break up the state-owned gas monopoly Gazprom, Deputy Prime Minister Arkady Dvorkovich told the state-owned paper Rossiiskaya Gazeta on May 20.

Speculation has been mounting that the state will break the inefficient behemoth up in its quest to make Russias biggest tax payer more efficient. More specifically, Gazprom is due to lose its export monopoly on gas exports soon after the Duma votes to allow privately owned gas producer Novatek to export liquid natural gas (LNG), due to happen in the next few months.

The obvious next step would be to split Gazprom into production and transport parts. After that the company could be split again into international and domestic production parts.

The Kremlin is clearly ratcheting up the pressure on the firm and recently order an audit of the companys books. Gazprom is famously opaque and has been dogged by corruption accusation for two decades where the top management enrich themselves using related party transactions.

The head of Russias Audit Chamber Sergey Stepashin said last week that the agency is now auditing Gazprom for the first time in five years and the results of the audit is due in November. The audit relates to the overall effectiveness of the company.

However, Gazprom also performs important political tasks, especially with Russias foreign relations, which the Kremlin is keen to maintain.

“No plans are in the making to split the gas monopoly into an extraction and transportation companies,” Dvorkovich said in the interview with Rossiiskaya Gazeta.

“What matters most now is clear rules regulating access to the gas transportation infrastructure, as well as financial transparency within Gazprom in running different businesses, and also a clear understanding of what spending is connected with the gas transportation infrastructure,” he said.

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