Gazprom puts on a tender face

Elena Butsimirova [photo Gazprom]

Elena Butsimirova [Gazprom]

Gazprom has appointed a new head of its export division, effectively the world’s most powerful gas trader: Elena Burmistrova, who was swiftly ushered in to talks with President Vladimir Putin.

Credited with helping to clinch the $400 billion (€293 billion) deal with China last month, the former Glencore employee discussed “eastern projects” with Putin and Gazprom Chief Executive Officer Alexei Miller, the Kremlin said.

Burmistrova’s appointment ended the 12-year tenure in the post of Alexander Medvedev, criticised for his tough style, in a surprise change of gear for Gazprom, the world’s biggest conventional gas producer and widely seen as an instrument of Kremlin foreign policy.

Gazprom is enmeshed in a fresh gas pricing dispute with Ukraine, which has increased friction with the European Union following similar spats over the past decade that resulted in supply cuts to many European states.

On Wednesday, Russian Prime Minister Dmitry Medvedev said he saw the situation escalating to a “full-scale gas crisis” by autumn.

Alexander Medvedev, 58, widely credited for Gazprom’s speedy expansion in the West, but criticised for clashes with Ukraine, will keep his role as deputy chairman of the state-controlled company.

One industry source suggested he might continue to run Gazprom Export from behind the scenes, but there was no indication Medvedev was present at the meeting with Putin and Burmistrova on Wednesday.

Burmistrova, 43, started her career in 1992 at Swiss-based Glencore, one of the world’s biggest mining and trading houses. She joined Gazprom Export in 2003, and had been Medvedev’s deputy overseeing liquefied natural gas (LNG) and new gas markets, as well as having other duties, since 2011.

Industry sources described her as an ally of Medvedev. “They prepared the China contract together. She contributed a lot to preparations,” one said.

The deal to supply China with gas over 30 years underlined the importance of winning contracts with Asia, as Europe tries to reduce reliance on Russian gas.

“Gazprom’s ambitious plans for external markets call for new structural and functional decisions,” Miller said in a statement that gave few details.


Medvedev had been considered a leading candidate for chief executive to replace Miller, who has been absent from work, sometimes for months, due to health problems.

But he has been criticised for his tough negotiating technique at a time when more flexibility was thought necessary to secure deals in both new and old markets, industry analysts said.

“Medvedev […] has been criticised by investors for his overly tough negotiating position and pricing policy with key European customers, especially after 2008, when Gazprom began losing market power in Europe,” Alexander Kornilov, an analyst with Alfa Bank, said.

“Investors would prefer Gazprom to be more flexible in talks with important European gas buyers,” he said.

Gazprom accounts for a third of European gas needs but is in dispute with some of its European buyers over prices. Its long-term contracts are traditionally linked to the price of oil but buyers want more emphasis on spot gas prices to reduce bills.

Medvedev managed Gazprom’s speedy expansion in the West, including in LNG markets, but was also linked to the decision last month to cut supplies to Ukraine in a pricing dispute – a move that prompted Western countries to accuse Moscow of using gas as a political weapon.

>> Read: Russia cuts off gas, Ukraine secures borders

He oversaw construction of the Nord Stream undersea pipeline that carries Russian gas to Europe without going through Ukraine, and was also behind the unfinished South Stream pipeline and Gazprom’s LNG strategy.

Gazprom is now at odds with the European Commission over both those pipelines, which the EU says violate its laws.

“Gazprom’s negative image abroad is mostly linked to Medvedev’s stance, who was trying to defend a tough position [in negotiations],” said Valery Nesterov, a veteran analyst at Sberbank CIB. “Gazprom’s export policy is changing but not because of its will but because of its clients.”

Russia’s gas export monopoly Gazprom sells its gas to EU clients under secretive bilateral deals.

An illustration on how Gazprom uses the price of gas as a political weapon was provided in the context of the unfolding Ukraine crisis.

Ukraine was paying Gazprom a price of $400 per thousand cubic metres (tcm)under an agreement signed under former Prime Minister Yulia Tymoshenko, back in 2009.

Moscow dropped the price to $268.50 after then-President Viktor Yanukovich turned his back on a trade and association agreement with the European Union last year, but reinstated the original price after he was ousted in February.

Ukraine insists on a price of $268.50 per 1,000 cubic meters while Russia stands by its demand for $485. The European Commission is trying to get the two sides to agree in the middle.

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