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Proposal to split state-owned Gazprom to increase competitiveness
April 22, 2013, 10:20 am


Russian President Vladimir Putin (left) and Rosneft President Igor Sechin during a meeting [AP]

The head of Rosneft Igor Sechin has suggested splitting Gazprom, Russia’s gas monopoly, into two distinct companies – transporting and extracting.

Experts believe this would boost Gazprom’s competitiveness, as it will allow Rosneft to put more pressure on Gazprom.

Gazprom has been experiencing troubles with its profit dropping by 37 per cent last year.

Many see the move as a strategic counter to the shale revolution which is threatening Russia’s position on the energy market.

Gazprom has established itself as Europe’s major supplier of natural gas but the shale revolution will give the European Union more room to manoeuvre.

The idea of splitting the gas monopoly is not new. It has been discussed since 1989 when the USSR ministry of gas industry was transformed into a corporation – Gazprom.

The idea was revived when Putin came to power, but Gazprom managed to stay intact.

Currently the company provides 20 per cent of the federal budget and the government holds a majority stake.

At present, however, Rosneft and Novatek, Russia’s second-largest natural gas producer after Gazprom, are challenging Gazprom’s dominance.

Novatek is Russia’s largest independent natural gas producer and is planning construction of a Yamal LNG plant together with the French Total.

Rosneft has recently consolidated 100 per cent of TNK-BP and purchased a controlling stake in Intera.

Up until recently the interests of Gazprom and Rosneft never overlapped, with the former operating in the gas production, and the latter – in oil output.

But with Rosneft’s recent purchases it is now striving to increase its gas output to 100 million cubic metres a year, while Gazprom produced 478 cubic metres in 2012.

Igor Sechin, President of Rosneft is the only Russian listed in the TIME’s annual list of the 100 most influential people in the world.

Listed in the section “Titans”, Sechin is described as “the expansionist” from Putin’s inner circle.

Daria Chernyshova

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