At the centre of the geo-political game between Kiev and Moscow is Gazprom, Russia’s largest company and the world’s biggest supplier of natural gas. Gazprom is also a powerful instrument in Russia’s new foreign policy, which now rests mainly on energy exports instead of Moscow’s military might.
Gazprom contributes about 25 per cent of all tax revenues to the federal budget and produces around eight percent of the country’s GDP. Previously viewed as a state within a state, for the last five years the group has been under the Kremlin’s direct control since Deputy Prime Minister Dmitry Medvedev became chairman and made Alexei Miller his chief executive.
Both are members of a young circle within the Russian leadership from St. Petersburg, Vladimir Putin’s hometown.
They are also among the Moscow elite to have snapped up Gazprom stock. This effectively means many of the same people who shape Russia’s foreign policy are also large Gazprom shareholders. But analysts say their inclination to use the company as a foreign policy tool is thus tempered by their personal interests in seeing the firm run efficiently.This year, Gazprom expects to earn around 55 billion euros.
It is currently worth 133 billion euros, or roughly half that of the General Electric Company, the world’s largest company by stock value. However some experts predict the company will easily double in the next year or two after share liberalisation. President Putin has already signed a decree lifting a 20 per cent cap on foreign ownership and investors are lining up to have their slice of the pie.
Gazprom accounts for 94 per cent of Russian natural gas and produces nearly a quarter of gas worldwide. It is also estimated to have around 26 trillion cubic metres of gas in reserve.
Furthermore, Gazprom controls more and more crude oil. The group has rights to huge, unexplored fields in eastern Siberia and is expected to win tax concessions next spring to develop them.