This is amusing:
The Kremlin’s ambition of turning Gazprom into a global energy titan is undermined by Soviet-style thinking, poor management and corruption, according to leaked US diplomatic cables.
Russian Prime Minister Vladimir Putin and his protege, former Gazprom board chairman Dmitry Medvedev who is now Russia’s president, have tried to use Gazprom to claw back some of the international clout which Moscow lost after the Soviet Union collapsed in 1991.
But leaked diplomatic cables from US Ambassador to Moscow John Beyrle paint Russia’s biggest company as a confused and corrupt behemoth still behaving like its predecessor, the Soviet Ministry of Gas.
Say it ain’t so!
The leaked cables cast Putin as Russia’s “alpha-dog” leader who allows a venal elite of corrupt officials to siphon off cash from energy sales, comments Russia’s leadership have dismissed.
This cannot be!
On a more serious note:
The US cables repeat the view of many Western and Russian analysts that Gazprom’s management misjudged the future by betting that soaring European demand would continue to support a seller’s market.
Instead Gazprom has faced demand destruction in Europe since 2009 as the global economic crisis forced European customers to slash consumption. They also often switched to liquefied gas from the Middle East, whose producers turned out to be much more flexible in their pricing policies than Gazprom.
Being a more flexible and reliable supplier than Gazprom is not difficult, but Russia being outperformed by a bunch of Qataris is bound to smart a little nonetheless.
“Gazprom was simply unprepared for the inevitable levelling off and current decline in European gas demand,” the US ambassador said in the cables, adding that Gazprom misjudged the impact of liquefied natural gas imports to Europe.
That explains the recent threats.
“Gazprom will have to cope with massive new volumes of LNG on the global market from projects already under way in Qatar and elsewhere,” he wrote.
Exactly how Gazprom and Russia cope will be interesting to see. Gazprom in this instance can be likened to a fixed-line telephone monopoly which has just seen the first mobile network installed on its territory. How it reacts will be crucial to its long-term viability.