Neither at home nor abroad does the company appear to have a competitive answer to the dramatic decline in gas prices worldwide — sparked by the rapid development of American shale gas. Gazprom, the world’s largest producer of natural gas, has grown somnolent, its critics say, failing to invest in research and development and ignoring the changes transforming the industry.
Under Putin’s control, Gazprom has been a principal driver of the rest of the Russian economy, generously spreading rewards and high-paying contracts to Kremlin favorites. It employs nearly half a million people, working in cities and towns in every region of Russia. Even now, as the company hits significant turbulence and declining profits, it is continuing its free-spending ways — with a new $1.9 billion office tower in St. Petersburg, planned as the tallest skyscraper in Europe, just a token expression of its opulent habits.
“It’s a very important instrument,” said Vladimir Pastukhov, a visiting scholar at St. Anthony’s College Oxford. But after 12 years, Putin and his friends have squeezed so much from it, he said, there may not be much left to wring out.
Gazprom’s troubles are likely to accelerate a long-running trend, which makes the government the loser. An extraordinary 60 percent of Russia’s revenue comes from taxes and income from fossil fuels, economists believe; Gazprom alone accounts for 12 percent of all Russian exports. The state owns just over 50 percent of the company and is heavily dependent on the taxes and profits it brings in. But as officially reported income goes down while spending stays steady, the government takes in less and less. Spinning off the more lucrative parts of the business has the same effect.
“It’s the nationalization of costs and the privatization of profit,” said Mikhail Krutikhin, an energy analyst with a company here called Rusenergy.
But the implications for Russia’s policy toward its neighbors and the rest of Europe are immense, because the Kremlin has used Gazprom as its chief club when bullying recalcitrant nations that depend on its supplies of gas. The consequences for Putin’s system itself — in which Gazprom has been both the main income generator and the chief dispenser of financial rewards to those in favor — are potentially profound.
“It’s going from being Russia’s greatest asset to Russia’s biggest problem,” said Vladimir Milov, once a deputy energy minister and a longtime critic of the company.