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Gazprom on Offensive in 'Gas War' with Ukraine

DW staff / AFP (tt)January 3, 2006

The "gas war" between Russia and Ukraine has had a chilling effect on Europe as a result of the continent's reliance on Russia's gas monopoly Gazprom. Supplying Europe with gas, however, is not Gazprom's only ambition.

Gazprom controlls the flow of much of Europe's gasImage: AP

Russia's increasingly powerful energy giant Gazprom, which has taken to the front lines in what European media described as a "gas war" with Ukraine, controls a third of global natural gas reserves and is the main supplier to western Europe.

Russian President Vladimir Putin intervened twice in the bitter row, offering compromise proposals that were rejected by Kiev, but it is Gazprom executives and spokesmen who have dominated Russian media, with numerous news conferences and interviews attacking Ukraine's position.

Once considered a "state within a state," Gazprom came under stronger Kremlin control after Alexei Miller took over as chairman in 2001. Then in 2005, the Russian state took a majority stake in the company.

The Russian behemoth

Gasprom Chef Alexej Miller
Alexei Miller has been Gazprom chairman since 2001Image: AP

Gazprom, which accounts for seven percent of Russia's gross domestic product and eight percent of the country's budget, has made no secret of the fact that it wants to expand into Russia's lucrative oil sector.

The firm bought Russia's fifth largest oil group Sibneft for $13 billion (11 billion euros) in Oct. 2005 -- a deal seen as a key step in moves by the Russian state to retake of control of the country's abundant natural resources.

Gazprom has also formed an extensive media empire, including national television channels NTV and TNT, numerous radio stations and the popular Izvestia daily and news weekly Itogi.

Gazprom's customers

Gazprom extracts 550 billion cubic metres of natural gas per year and exports around 150 billion cubic metres to 28 countries in Europe and the former Soviet Union. The energy giant is the main supplier to western Europe, accounting for around a quarter of Europe's imports.

Germany, Gazprom's biggest customer, imported almost 36 billion cubic metres of natural gas from Russia in 2004, or around a third of annual consumption.

Erdgas-Pipeline, Symbolbild
Germany is Gazprom's largest customerImage: AP

Italy imported 21.6 billion cubic metres, also roughly a third of national consumption, and France depends on Gazprom for a quarter of its natural gas, or around 13 billion cubic meters.

In central Europe, the Czech Republic, Hungary, Poland and Slovakia are the main Russian gas importers.

Gazprom also exports to Austria, Bosnia-Hercegovina, Bulgaria, Croatia, Finland, Greece, Macedonia, Netherlands, Romania, Slovenia, Switzerland and the three Baltic states (Estonia, Latvia and Lithuania), which depend completely on Russian gas.

Around 90 percent of Russian gas exports to Europe transit through Ukraine.

Turkey is also a major consumer of Russian gas, with 14.5 billion cubic metres of imports in 2004, or 63.7 percent of national consumption. The gas is delivered partly through the Blue Stream pipeline between Russia and Turkey, which runs under the Black Sea.

Several former Soviet republics, including Armenia, Belarus, Georgia, Moldova and Ukraine, also depend heavily on Russia for their gas supplies.

Double standards

Putin und Schröder, Gasprom
Russian President Putin and former German Chancellor Schröder brokered a German-Russian pipeline dealImage: dpa

Ukraine, which had its supplies from Gazprom cut off on Jan. 1 after talks to resolve a politically-charged price dispute failed, imports between 25 and 34 billion cubic meters of Russian gas per year, or around a third of its needs.

Moldova, which received 1.75 billion cubic metres in 2004, also reported Monday it was not receiving any Russian gas because it had failed to agree on a price for the imports.

Gazprom will, however, deliver gas to ex-Soviet Belarus, which is considered an ally by Moscow, amounting to 21 billion cubic meters in 2006 at the preferential rate of $47 per 1,000 cubic meters in 2006.

Gazprom is seeking to diversify its transport routes to western Europe and struck a deal with Germany in 2005 to build a natural gas pipeline under the Baltic Sea that is set to be completed by 2010.