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    Gazprom Pares Down Its Export Business

Summary

Gazprom has restructured its export business, but left it unclear why. It could have several motives.

by: Mark Smedley

Posted in:

Natural Gas and LNG News, Europe, Corporate, Corporate governance, Appointments, Import/Export, News By Country, Germany, Russia, United Kingdom

Gazprom Pares Down Its Export Business

Gazprom has made a series of announcements on restructuring of its export business, but left it unclear whether the primary aim is to simplify its management chain, cut costs, or adapt better to the increasingly competitive and uniform European market.

The Russian gas giant has already cut many jobs from its sales and support operations in recent years, including as many as 20% of its London-based staff, in response to low revenues from exports.

Gazprom said February 12 it had decided to “transform the operational structure of its export activities, including marketing and trading. The new business model sets up an Integrated International Marketing Division (IIMD), which will be responsible for supplies, trading and marketing within the entire export portfolio of Gazprom.”

It is conceivable that Gazprom is restructuring in a bid to have a nimbler gas export arm, should its pipeline gas export monopoly be scrapped by the Kremlin. Rosneft wants to be allowed to market its Russian gas in Europe with BP. But the view in the Russian parliament is that what is good for Gazprom is good for Russia, so the cuts may be to do with lower sales revenues, or to do with the changing face of the European gas market, where the advance of hub trading and third-party access has left Gazprom in a weaker position to divide and rule.

The new IIMD will be developed in two stages in the space of two years: “The first stage will involve the merging and optimisation of activities and assets within the Gazprom Germania Group. At the second stage, the newly restructured Gazprom Germania and Gazprom Export will unite their operations so as to set up the Integrated International Marketing Division.” Its statement gave no indication of how many, if any, jobs might go – or why certain senior figures were leaving.

Among Gazprom Germania's subsidiaries are pipeline operator Gascade, supplier Wingas, the German trading house Wieh, Turkish Bosphorus Gaz and Czech Vemex.

Last week Vitaly Vasiliev was replaced as CEO of Gazprom’s London-based Gazprom Marketing & Trading (GMT). He had been in the job since its formation in 2004.

And in an equally unrevealing statement, Wingas said that three of its board directors were stepping down, to be replaced by just two.

Wingas, and its immediate parent Gazprom Germania, both said February 8 that Lavrenty Pilyagin and Slawa Margulis were appointed Wingas managing directors effective February 9, replacing Dmitry Kotulskiy, Ludwig Mohring and Vasiliev. Kotulskiy and Pilyagin remain listed on GMT’s website as commercial and operations directors respectively. Mohring had been sales director since 2010 of Wingas, so since Gazprom took full control of the company in 2015; it was previously a 50-50 Wintershall joint venture.  

Vasiliev’s departure follows the equally unexpected announcement that Frederic Barnaud, a GMT director since 2007 and head of LNG, oil and shipping, would be leaving Gazprom for the top job as CEO of Singapore-based Pavilion Energy effective February 1 this year. NGW first reported the move as a coup for Pavilion, but a statement provided later by GMT to NGW suggested that he jumped before his job was axed.

"Following a recent corporate restructure, GM&T's LNG, Oil and Shipping divisions have been absorbed into the more streamlined departments of Trading and Origination. GM&T's executive team, in partnership with the company general managers, will be accountable for Mr Barnaud's previous responsibilities. We would like to thank Frederic for his considerable contributions to GM&T and wish him continued success for the future," the GMT statement read.