Miller's strength is not in Siberia

What helps Alexey Miller to stay on as the head of Gazprom.
Origin source
The head of Gazprom Alexei Miller announced the start of design and survey work on the construction of a new gas pipeline to China - “Power of Siberia-2”. It can become the basis of a new export channel through Mongolia to China with a capacity of up to 50 billion cubic meters. m. Experts believe that the construction of the pipeline will take from four to six years, the cost may amount to 1.3-1.5 trillion rubles. Prospects are judged carefully. Which is understandable - the corporation’s development strategy focused on export deliveries, to put it mildly, does not bring the expected results.

At any cost

Thus, the Power of Siberia gas pipeline, through which Russian gas is to be delivered to China, cost about 1.1 trillion rubles. But it turned out that there was simply not enough gas to fill the Power of Siberia gas pipeline.

Engineers involved in the development of the Chayandinskoye field (critical for filling the Power of Siberia gas pipeline) wrote a letter to Viktor Zubkov, Chairman of the Board of Directors of Gazprom, as well as to the Accounts Chamber and the Presidential Administration. They said that the planned gas production at the field is stored only in one third of the wells, in the other third there is only partially gas, in another third it is completely absent.

According to Vyacheslav Shchegolev, Leading Engineer of the Production and Technical Department of the Organization of Work and Construction of Fixed Assets of Gazprom Dobycha Noyabrsk Management, this happened because the wrong solution was chosen during drilling and due to insufficient exploration.

Vyacheslav Shchegolev said that at a meeting in a narrow circle with Gazprom chairman Alexei Miller, they decided to "go to Chayanda, whatever it takes," because "either we go in with our gas, or the Americans come in with their LNG." As a result, an uncalculated economic decision was made.

According to oil and gas analyst Mikhail Krutikhin, this could not have done without the usual sloppiness, postscripts and design errors. And Vyacheslav Shchegolev for trying to get dirty linen out of the hut was sent to work in the most remote unit in Kamchatka.

It was supposed to completely fill the “Power of Siberia” with gas after the launch of the Kovykta field. However, full exploration drilling in the Irkutsk region showed that it is half dry.

It remains to be noted that there were those who were probably quite satisfied with such an expensive project - these were contracting companies, Stroytransneftegaz Gennady Timchenko and others.

After the annexation of Crimea in 2014, Bulgaria rejected the South Stream project. The construction of the Turkish Stream, which partly uses the onshore infrastructure of the South Stream, has stalled due to Turkey’s reluctance to build a meaninglessly powerful gas pipeline.

Turkey cut the planned capacity by 2 times - up to 15.75 billion cubic meters of gas per thread for its own needs, and up to the same volume of the second string for the needs of Europe. But Turkish consumers often prefer gas from Azerbaijan or LNG brought from all over the world. In December 2019, the state-owned gas company Botas bought 30 lots of LNG with deliveries until March, and earlier - 70 with deliveries in 2020-2023.

Compared to 2018, shipments fell 14 times. Thus, Turkey, previously ranked second among Gazprom’s largest customers, is in the top ten with less purchases than Lithuania.

The laying of Nord Stream-2, which is supposed to supply gas to Germany, cost Gazprom a lot of money - 4.15 billion euros for the offshore part, and 1.1 trillion rubles for creating ground-based infrastructure. As a result, due to US sanctions threatening the Swiss company Allseas, construction stopped 160 km from completion.

But even if a miracle happens, and the Nord Stream-2 gas pipeline is completed, it promises Gazprom some losses. In accordance with EU requirements, half of its capacity - 27.5 billion cubic meters per year out of 55 billion - the Russian gas monopoly will have to be given to independent suppliers. And such physically does not exist.

Hard times

As a result, the affairs of the largest Russian monopolist are far from brilliant. Gazprom’s net profit for 2019 under IFRS amounted to 1.203 trillion rubles, which is 17% lower than in 2018 (1.456 trillion rubles). Revenue from sales decreased by 7%, to 7.66 trillion rubles.

A substantial reduction in the investment program in 2020 for the group as a whole is also planned - up to 1.6 trillion rubles. against 2.125 trillion rubles. a year earlier.

This year an unprecedented event happened - the management of Gazprom, left without bonuses at the end of the year. We are talking about non-payment of premiums of about 1 billion rubles.

Yes, of course, we can talk about the objective reasons for what is happening.

February gas prices in Europe beat a 16-year low, dropping to $ 101.7 per 1000 cubic meters in the Netherlands Title Transfer Facility (TTF), and to $ 95.7 per 1000 cubic meters in a hub in Zeebrugge. Add to this the US trade wars with China, the coronavirus epidemic, and warm winters. In addition, in anticipation of a gas conflict between Russia and Ukraine, European companies filled gas storages in advance.

Proven Model

But there are personality management factors. And here it is worth paying attention to the competence of top management. Alexey Miller in 2001 was elected Chairman of the Board of Gazprom, replacing Rem Vyakhirev in this post. According to media reports, Miller’s appointment came as a surprise to company management. They learned the name of the new head of the corporation several hours before the meeting of the board of directors. After the election, Alexey Miller himself said that he intends to strengthen the role of the state in the company, which was done. In 2004, a controlling stake in Gazprom returned to the state.

Gazprom’s policy in recent years has remained unchanged. The needs of the population were largely ignored (the gasification of the regions left much to be desired), the projects selected were the most expensive, and export projects turned out to be futile.

It is clear that in the well-fed times, at high gas prices, the monopolist felt great. But these times are gone.

But the management model, which involves an extensive network of Gazprom structures throughout the country and, of course, a huge number of regional managers, in whose hands the ability to manage financial flows in their areas has concentrated, remains.

Directly, Alexey Miller was not seen in any serious scandals. Perhaps the news about his new apartment in St. Petersburg with a total area of ​​almost 2 thousand square meters and a market value of about a billion rubles, which made people fool around.

But to be honest, it’s not so long ago that has occupied everyone. In addition, afford to buy a similar apartment to Alexei Miller is quite capable. For 2014-2015 alone, according to Forbes magazine, he received remuneration of almost $ 45 million.

But with the managers of the rank lower scandals occurred quite often, and even what. So last year, the Investigative Committee of the Russian Federation (IC) accused a group of managers of Gazprom Mezhregiongaz structures, led by adviser to the general director Raul Arashukov, in stealing natural gas. His son Rauf, a senator from Karachay-Cherkessia, was also charged with pressure on witnesses and murder.

Also last year, the prosecutor's office opened a criminal case on the theft of 700 million rubles during the construction of a gas pipeline near St. Petersburg.

The company, headed by Alexey Miller, paid for the construction of a gas pipeline to Priozersk, but the contractor squandered all the money by completing only part of the work.

Gazprom management is used to living beautifully, this is not news.

But the stories about how company executives flew to sign contracts accompanied by artists, strippers, with songs and dances are impressive.

But the news about how managers behave in critical situations is simply amazing. So, recently the media talked about how the coronavirus epidemic began at the Chayandinsky oil and gas condensate field in the Lensky district of Yakutia.

It is reported that everything was in order at the field, until one of the leaders of Gazprom dobycha Noyabrsk went on a business trip to Moscow. Suspicion of coronavirus infection was hidden until the last moment in the field. The subordinates of Igor Krutikov, Director General of Gazprom dobycha Noyabrsk LLC, began to move only after the local authorities sounded the alarm. As a result, people were gathered in a dormitory, there were no medicines, no help either. Workers have been kept in isolation since April 17, and they rebelled.

The shift workers began to run away, and in some inconceivable ways. “Some people walk 200 kilometers on foot to Vitim. There is a boat on which you can get to the village where there is a railway connection in 6 hours. That is, people, one might say, are forced to walk with bears because of inaction, ”said a representative of Energomontazh SK.

This is an illustration of how the life of the “lower classes” in Gazprom differs from the life of the “upper circles”. And this has been happening for many years.

Last year, the market optimistically reacted to rumors about the departure of Alexey Miller from his post. Shares soared. Gazprom bypassed the capitalization of Sberbank, becoming the most expensive company in Russia. At the peak of growth, the share price of the gas monopoly on the Mosbirz jumped 16.99%, to 251.65 rubles, capitalization reached 5.95 trillion rubles.

True, such rumors periodically arose over the past ten years. But Alexey Miller remained firmly in office. While the scandals in no way affected his position.

However, it should be noted that even if a new person takes his place, it is very doubtful that the policy of Gazprom may change.