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In the Upper Room with Miller: why Has Ananenkov Been Sacked?

This is an abridged version. The full text is avaiable to subscribers to The Russian Energy weekly.

Procrastination in preparing a commercially efficient Eastern Gas Program was one of the principal reasons for the retirement of Alexander Ananenkov, RusEnergy has learned from its sources at Gazprom. His successor, however, will hardly be able to darn the holes in the program.

Lame Logic

Reforms are overdue in Gazprom, and any changes in the top management are regarded as the onset of a cardinal restructuring. In late December, Deputy Chairman Alexander Ananenkov and two management board members, Olga Pavlova and Viktor Ilyushin, were shown the door. While the age of the retired officials was evidently a factor, observers started guessing…

Consecutive events are easy to predict. When Vladimir Putin returns to the presidential office in the Kremlin, he will delegate Dmitry Medvedev to form the cabinet of ministers (the tenure might be short, but public promises must be carried out). It means that Igor Sechin, who is in charge of the energy industry, will move to the presidential administration as well: his relations with Medvedev are reportedly not serene.

Putin will have then to delegate a trustworthy person to Medvedev’s cabinet to watch over oil and gas, and Gazprom Chairman Alexei Miller is one possible candidate. The December purge at Gazprom could be initiated to prepare the ground for a new management team to change Miller’s policy, which has taken the gas giant to stagnation.

This scenario is not faultless. The successor of Miller might decide that everything is not as bad as it appears to shareholders who cannot get any profit from Gazprom stock, or to the tax service that is unable to collect as much taxes from gas as oil companies pay, or to buyers of Russian gas who suffer from soaring prices.

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