Miller Orders Staff Cuts on Rising Costs

Gazprom said Friday that it was working to cut staff just weeks after reporting that its salary expenses grew by one-quarter last year.

Chief executive Alexei Miller ordered measures to "optimize" staff numbers and cut expenses on administration, Gazprom said in an e-mailed comment. A spokesman for the world's largest gas producer declined to say how large the downsizing would be or when it would start.

Kommersant reported Friday, citing sources inside the company, that the cuts would come into force in January and affect the head office and its branches — which employ nearly 6,000 people.

"It's one of the first realistic proposals … for getting costs under control," Alfa Bank said in a note to investors. "Given Gazprom's bloated headcount, significant efficiencies are no doubt achievable if management seeks them."

Gazprom spent 249 billion rubles ($10.9 billion) on salaries and retirement payments last year, up 25 percent from 2006, it said last month in its annual financial results statement.

That amount accounted for 15 percent of the company's total operational expenses last year. Overall, Gazprom employs 436,000 people.