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. Last Updated: 07/27/2016

Gazprom to Shed Uneconomic Assets




In a speech long on rhetoric and short on specifics, Gazprom chief executive Rem Vyakhirev has announced a major restructuring program to streamline operations and spin off some of the firm's dead wood.


The gas monopoly will set up a new affiliate based on performing assets some time next year, Vyakhirev said at a Saturday news conference.


As well as allowing Gazprom to develop a new structure to handle all its major activities from exploration to marketing, the new outfit will provide new employment possibilities for the gas company's current management, he added.


"This will be a serious company. All the rubbish will be separated" Vyakhirev said. He did not elaborate on exactly what he meant by "rubbish."


The announcement may well have been aimed as a counterblow to government pressure for Gazprom to supply in full domestic consumers, including electricity utility Unified Energy Systems, even when they fail to pay.


The company could be hinting that it will separate off bad debts and social costs - leaving those behind as part of a low-performance Gazprom, while setting up an "escape capsule" affiliate made up of the more profitable parts of the firm.


Meanwhile, analysts speculated that the "rubbish" Vyakhirev wanted to dump could include peripheral assets such as petrochemical and gas refining firms and metallurgical plants as well as service units and social infrastructure.


Gazprom has come under increasing pressure from the government in recent months, both politically and financially. While UES boss Anatoly Chubais has been visibly in favor with the government of Prime Minister Vladimir Putin, Vyakhirev has had several public confrontations with Fuel and Energy Minister Viktor Kalyuzhny.


The latest piece of financial pressure came Monday, when the government, as expected, signed a resolution to introduce export duties on gas.


The 5 percent duty with a floor of 2.5 Euros ($2.52) is expected to come into force Tuesday, Prime Tass reported.


Gazprom is also facing problems due to Ukraine siphoning off gas as it is piped through its section of the old Soviet pipeline system, Vyakhirev said.


"If Ukraine didn't exceed its permitted gas volumes, then we would have enough of our own gas for this winter," he said. "Instead, we won't have enough gas for next winter stocks."


As a result, Gazprom has turned to Turkmenistan, signing a one-year agreement with Dushanbe to purchase 20 billion cubic meters of Turkmen gas for deliveries to Russia next year. Close Gazprom ally Itera will handle the contract.


The gas will be sold at the Turkmenistan-Uzbekistan border for $36 per 1,000 cubic meters. About 40 percent of the volumes will be paid in cash with the rest to be offset in barter schemes, Vyakhirev said.


Gazprom is also campaigning to hike domestic gas prices next year from the current level of $10 to $12 per 1,000 cubic meters. "We have to stop these kids' games with gas prices," Vyakhirev said. "For $36, I do not plan to sell gas at the domestic market. We are better off selling it to someone else."