September 2013, Vol. 240 No. 9


Gazproms Valuation Continues To Plummet

It wasn’t long ago that Gazprom was worth $350 billion, making it the third-most valuable company in the world.

As doubts grow over the future of the Russian gas export monopoly, its share price has tumbled. Recently, its valuation dipped below $100 billion for the first time since 2009, which will only heighten calls to break the vast monopoly up and put the firm on a more commercial basis.

The gas market has been radically shaken up by the advent of shale gas and the growing importance of LNG, which has freed gas producers from the need to build geo-politically awkward pipelines and thus truly commoditized gas. Gazprom was forced to give its European customers billions of dollars in rebates last year as prices for gas tumbled in the face of growing competition – and it’s likely to have to do the same this year.

At the same time, criticism of the way the company is run is mounting. Russian Deputy Economy Minister Sergei Belyakov called Gazprom a “black box” when it comes to how it spends its money, which not even the Kremlin can pry open. This according to a recent interview with Bloomberg in which he warned that will change as the Kremlin is getting increasingly tough on its state-owned companies as part of the mounting anti-corruption drive.

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