Gazprom

Article

August 14, 2022

Gazprom (Russian: Газпром; long version: Публичное акционерное общество «Газпром») is the largest Russian joint-stock company and the largest exporter of natural gas in the world.

Economic activity

Characteristics of the concern

Gazprom supplies natural gas to many countries of the European Union, mainly to Germany, the Czech Republic, Slovakia, Austria, Hungary and Poland. In addition, it supplies Eastern Europe and the states of the former Soviet Union, including Ukraine. In recent years, its trade with Turkey and with countries outside Europe, especially with China, has also been developing. Gazprom will also extract gas in Bolivia. It also supplies gas to the United States market, where it holds about a 5% share.[source?]In 2005, a contract was concluded between Gazprom and the German concerns E.ON and BASF on the construction of a large-capacity gas pipeline under the Baltic Sea from Russia directly to Germany. This gas pipeline, called Nord Stream, is already in operation. Former German Chancellor Gerhard Schröder became a member and later chairman of the supervisory board of Nordeuropäische Gasleitungs-Gesellschaft (NEGP), which operates this gas pipeline. Currently, the construction of the second section of this gas pipeline, called Nord Stream 2, is already ready, which would further double the transport capacity. However, this construction is facing strong opposition from Poland, Ukraine and also the United States. Gazprom is also involved in oil production and distribution on a large scale. In 2007, it had 445,000 employees; by 2016, this number had increased to 456,000. This means that Gazprom is the second largest employer in the country after the Russian Federation's military, with above-average earnings. USD 151.8 billion, the Russian government holds a controlling majority of 50% plus one share, while the remaining almost 50% shares are held by private investors. Gazprom shares are traded on Russian and foreign stock exchanges. The chairman of Gazprom's board of directors is Alexei Miller; the Russian government has the majority of representatives in its supervisory board. Since November 2011, Gazprom fully owns the Belarusian company Beltranshaz, which operates transit gas pipelines to Europe. In addition to the payment of 2.5 billion dollars, Gazprom committed to supply cheaper gas to Belarus for several years as part of the deal. Gazprom is building its new headquarters in St. Petersburg called Lakhta Center. Part of the headquarters is a super-modern skyscraper that is not yet completely finished, which as of January 2018 is 462 meters high, with 87 floors and a superstructure. This makes it the tallest building in all of Europe, while the next four places in this order belong to skyscrapers in Moscow.

Economic results

In 2016, the total turnover of Gazprom's business activity was 6,100 billion rubles (₽), which at the time at the exchange rate of roughly 70 rubles to 1 euro corresponded to 67 billion euros and roughly 1,800 billion CZK. This left the concern with an operating profit of 725.6 billion rubles (about 10 billion euros). Total assets that year amounted to 16,900 billion ₽ with equity of 11,400 billion ₽. In 2017, Gazprom saw its turnover increase by 7% to 6,500 billion rubles. The concern owes this result mainly to the fact that it managed to increase performance in oil production, while sales of natural gas increased by only 1%. In terms of volume, only almost 50% of the gas goes to European countries, but thanks to much higher prices than on the Russian market, business with European customers generated more than 67% of Gazprom's turnover from gas extraction. Gas prices for Russian customers must not exceed a certain limit, which takes into account the purchasing power of the Russian population and businesses.

Criticism

Some critics see Russian gas deals as a political weapon that the Russian government allegedly uses to exercise its