Wednesday, July 30, 2014

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Rusakova Joins Rosneft to Lead Natural Gas Activities

Source: Gazprom
Source: Gazprom

Mikhail Krutikhin: A feminine touch

Alexey Miller has lost another round of under-the-rug battles in the Kremlin. His adversary and competitor Igor Sechin, who leads Rosneft, has hired Vlada Rusakova as his vice president in charge of gas business. Before this appointment, she was a member of Gazprom’s management board and the boss of the gas monopoly’s strategic planning department. And she is a priceless source of information about internal secrets of Gazprom…

For Miller, Rusakova was a constant cause of headaches. A skilled and honest economist, she was unable to hide her resentment about dubious commercial value of some overhyped and overpriced projects—such as the Altai pipeline to China—and in a few cases managed to have bad ideas dropped from the company’s investment plans. Her sober and skeptical attitude could not fail to irk Chairman Miller who is always eager to make optimistic reports to President Vladimir Putin and to the global audience.

Sending Rusakova to retirement after a clumsy attempt to restrict her authority by restructuring her department was a big mistake. Miller evidently never heard the adage ascribed to U.S. President Lyndon B. Johnson (about FBI Director J. Edgar Hoover): ‘It's probably better to have him inside the tent pissing out, than outside the tent pissing in.’

The strategically important appointment could not be made without Putin’s blessing, and it did send a signal to the energy industry. The gas monopoly faces quickly growing powers of competition. Sechin, a close associate of the Russian president, is determined to develop a big gas business at Rosneft and infringe on the privileges of Gazprom. His may even outperform Miller in building an LNG facility in the Far East in an alliance with ExxonMobil, and enjoy the right to export liquefied gas because the Exxon-led Sakhalin I project can do it regardless of Gazprom’s monopoly: it has been grandfathered by a federal law.

Another challenger is Novatek, guided by Gennady Timchenko, also an old friend of Putin. Its Yamal LNG project, a joint venture with Total, has already been granted exceptional tax reductions and may compete with Gazprom on the foreign markets soon.

Miller has presented too many costly projects to his boss in the Kremlin and now must double the investment program of his company to carry out even the most politicized ones. Gazprom’s market value in the meanwhile has sunk dramatically and keeps shrinking together with Miller’s reputation.

Industry sources have resumed speculations about an imminent reform of the ailing gas giant—and Sechin and Timchenko allegedly lead the attacks. It is hard to expect any radical steps of the Russian president vis-à-vis Gazprom immediately, as the company’s finance is seen as the principal source of ‘Russia’s second budget’, but the time may soon get ripe

Published with the kind permission of RusEnergy. Mikhail Krutikhin is with RusEnergy, an independent privately-run company established in 2000 by a group of Russian experts with a long experience in consulting and publishing business. Based in Moscow, it specializes in monitoring, analysis and consulting on oil and gas industry of Russia, Central Asia, Azerbaijan and Ukraine.

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