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. Last Updated: 07/27/2016

Vyakhirev Shores Up Power At Gazprom

Wednesday's much anticipated showdown over control of Gazprom was won by Gazprom chief executive Rem Vyakhirev, who stayed in the saddle at the cost of allowing his former ally and boss Viktor Chernomyrdin to return to a position of power in the company.

In the weeks leading up to the annual shareholders meeting of Russia's mightiest company, leading government figures had publicly floated the idea that Vyakhirev might need to be cut down to size.

Vyakhirev rules the company thanks largely to a 37.5 percent share owned by the government but entrusted to him to manage. In recent weeks, however, new Fuel and Energy Minister Viktor Kaluzhny has announced his desire to take back that stake and manage it himself for the state.

Kaluzhny's threat came as the Kremlin f having publicly and repeatedly announced itself to be preoccupied with parliamentary elections, now less than six months away f has been tightening its grasp over the media and sniping at political opponents, such as the Communists and Moscow Mayor Yury Luzhkov.

It has also been consolidating control at major cash cows like Unified Energy Systems, the national power grid, and it has been taken as a truism by most political observers that the pressure put on Vyakhirev in recent days is about controlling campaign purse strings. "In an election year, everyone needs Gazprom," the Kommersant newspaper noted Thursday.

That's because Gazprom f according to Chernomyrdin, a former prime minister and the man who founded and first ran Gazprom as a company f is immensely wealthy, provides half of Russia's gas and supplies a third of its tax revenues.

Chernomyrdin, Prime Minister Sergei Stepashin and Kremlin chief of staff Alexander Voloshin together visited Vyakhirev at Gazprom headquarters Wednesday, on the eve of the board elections. By Thursday, Vyakhirev was cracking jokes at the post-vote press conference as a grim and intense Chernomyrdin looked on.

Four new board members were elected to the 11-member board f including Chernomyrdin, who was voted in as chairman. But judging from his broad smile, Vyakhirev apparently still holds the government's trust agreement f it officially ran out March 31, but has either been automatically or de facto extended f and with it day-to-day control of the company.

Neither government nor company officials would comment on the exact situation regarding the 35 percent stake.

Part of the deal keeping Vyakhirev in power may been an informal pact for the upcoming December elections to the State Duma. According to several shareholders, Vyakhirev told those attending the meeting Wednesday that Gazprom will decide who to endorse for the Duma elections only after President Boris Yeltsin announces his preferences in the autumn.

Vyakhirev and Chernomyrdin both refused to comment publicly on their political preferences Thursday. Although some media had suggested Chernomyrdin, and not Kaluzhny, would be crowned if Vyakhirev had been ousted, the two gas men also downplayed their rivalry.

"With Viktor Stepanovich [Chernomyrdin] we will agree, as we have agreed for 30 years," Vyakhirev said at the press conference.

"Do not look for gaps between us. We did not have any and we won't have," Chernomyrdin said soon after.

Chernomyrdin emphasized solidarity by proclaiming that harmony fand working to increase Gazprom's already impressive might f would be the aims of management.

"Gazprom will become even more monolithic," added Chernomyrdin, who spent a lifetime in the Soviet natural gas bureaucracy. His two sons also work in the gas industry, holding high-ranking posts at Stroitransgaz, a pipeline construction and gas exploration firm.

Chernomyrdin's return to Gazprom installs a strong Yeltsin ally at Russia's richest enterprise. It also continues the resurrection of his political career: Last year, Chernomyrdin f who, after six years as Yeltsin's loyal premier had begun to preen himself as Yeltsin's successor f was unceremoniously sacked.

It was a humiliation, but Chernomyrdin did not complain. He was rewarded this year with an appointment as the Kremlin envoy to negotiations over the Kosovo crisis, and now with Gazprom.

Other than Chernomyrdin, the government can rely on Property Minister Farit Gazizullin, a Gazprom board member who was chairman of the board last year. The Yamal-Nenets region Governor Yury Neyolov is listed among the government's official emissaries f there are four of them now instead of five, in another concession to Vyakhirev f but Neyolov has long been seen as a Vyakhirev ally. Gazprom produces about 90 percent of its gas in the Far North Yamal-Nenets region.

Stroitransgaz president Arngolt Bekker also secured a post on the Gazprom board. Despite his ties to Chernomyrdin, Bekker is seen as one of the seven members, including Vyakhirev, more loyal to existing Gazprom management. Stroitransgaz holds a 4.83 percent stake in Gazprom.

None of the new board members for the state represent Kaluzhny's hostile ministry. Former Cabinet member and right-wing liberal Boris Fyodorov, whose United Financial Group brokerage holds a stake in Gazprom, withdrew his candidacy. Fyodorov, who as tax minister went after Vyakhirev's Gazprom aggressively, was named last week to the board at UES.

At the same UES shareholder meeting, Kremlin Chief of Staff Voloshin was appointed chairman of the board. Also, UES chief executive Anatoly Chubais f a Kremlin loyalist with a Vyakhirev-like independent streak f pushed through changes to the UES charter making it difficult to remove him. Under the new rules, 75 percent of shareholders most vote to fire him, instead of 50 percent.

Other members of the Gazprom board are Lev Mironov, chairman of the gas workers trade union; Deputy Finance Minister Andrei Petrov; Viktor Tarasov, who heads the Gazprom pension fund and is chairman of the board of Gazprombank; Yugtransgaz general director Vladimir Chumakov; Vyakhirev's deputy, Vyacheslav Sheremet; and Astrakhangazprom general director Viktor Shugorev.