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. Last Updated: 07/27/2016

NEWS ANALYSIS: Gazprom Board Nominees Bypass Fuel Ministry




The government appears to have eased recent pressure on top management at Gazprom in the run-up to Thursday's extraordinary shareholders meeting at the gas giant, drastically cutting the number of state candidates for the company's board of directors.


After initially floating a list of 11 candidates, the government announced on Wednesday that it would support just five candidates for the 11-member board. The state holds 38.37 percent of Gazprom.


As expected, former prime minister and Gazprom co-founder Viktor Chernomyrdin tops the list and will likely retain his post as board chairman.


However, the remainder of the list came as a major surprise to industry observers. Rather than including anyone from either the Fuel and Energy or Finance ministries, the remaining four state candidates are from either the State Property Ministry or from the State Property Fund, the quasi-independent body that is charged with organizing and running privatization sales.


Ever since the government decided last month to call for Thursday's shareholders meeting, there has been intense pressure on Gazprom chief executive Rem Vyakhirev from government officials and Kremlin insiders, fed by rampant media speculation that Yeltsin's inner circle f known as "the family"f is eager to get its hands on the monopoly's billion-dollar cash flows.


Segodnya newspaper, whose Media-MOST publishing house is about a third owned by Gazprom, printed a report last Friday that claimed the Kremlin has a power scenario to oust Vyakhirev from his post.


"No legal possibility exists to remove the chairman of the top management," Segodnya reported.


The paper said that on Tuesday, Vyakhirev would be invited to the Kremlin, where "Boris Yeltsin will use all of his available means to convince him to resign from the post."


However, it is unclear whether or not such a meeting even took place.


And Chernomyrdin f who has strong ties to Yeltsin f downplayed the possibility of Vyakhirev's demise in an interview that was to be printed in Thursday's edition of Obshchaya Gazeta, a newspaper owned by tycoon and Kremlin insider Boris Berezovsky.


"I do not actually, think that it will come to his dismissal," Chernomyrdin said when asked about the Gazprom boss' future, according to a copy of the article provided to The Moscow Times.


In fact, it would be extremely difficult to knock Vyakhirev off his post. Gazprom's charter states that the chief executive can only be removed by the unanimous vote of the board f on which Vyakhirev sits.


The government's list of candidates would appear to be a setback for Fuel and Energy Minister Viktor Kalyuzhny f a constant and savage critic of Vyakhirev f who has been pushing hard to get a representative from his ministry onto the board at Gazprom.


Kalyuzhny said Wednesday that his ministry's candidate remained Deputy Fuel and Energy Minister Pyotr Nidzelsky, Interfax reported.


However, Nidzelsky's name was not on the state's list. Officials at the ministry were unavailable for comment.


State pressure on Gazprom has not evaporated. Inspectors from the main executive office of the president's administration visited Gazprom headquarters Tuesday, according to Vremya MN newspaper reported.


The inspectors were interested in activities involving Gazprom shares in 1994 f a time when shares were being consolidated among gas company employees and minority shareholders were being bought off, the newspaper reported.


In a further blow against Kalyuzhny f and a major plus for Vyakhirev f the Cabinet confirmed that the Gazprom chief executive would vote a government-owned 35 percent stake on the state's behalf.


Vyakhirev, who is expected to retain his seat on the board, has managed that 35 percent stake on the government's behalf since 1996 under a trust management agreement.


Kalyuzhny on several occasions has urged the government to terminate that trust agreement.


Kalyuzhny's apparent failure to make much headway against Gazprom may be related to the recent waning of First Deputy Prime Minister Nikolai Aksyonenko's influence.


Aksyonenko f who presented Kalyuzhny at his first official public appearance as fuel and energy minister in May f was designated as the senior of two first deputy prime ministers in the Stepashin Cabinet.


However, Prime Minister Vladimir Putin has made it clear that Aksyonenko and fellow First Deputy Prime Minister Viktor Khristenko are equals.


However, the government's list of candidates is not all gravy for Vyakhirev.


By failing to place Yamalo-Nenets Governor Yury Neyolov f who was formerly one of the government-nominated board members f on its list, the government has given Gazprom management a hard choice.


Gazprom produces about 90 percent of its gas in the Yamalo-Nenets region, situated east of the Ural Mountains. Thus it would be difficult for Gazprom to leave Neyolov off the board.


The Yamalo-Nenets leader, who has generally walked a thin line between the Kremlin f which has some capacity to make any regional leader's life difficult f and Gazprom f on whose cash Yamalo-Nenets relies f could therefore give the state a one-member majority on some decisions should Gazprom vote him onto the board.