Analysis of gasification sector in Russia
Although Russia is a world power in terms of natural gas production and export, not all Russian regions have undergone gasification (they are not provided with the introduction of natural gas distribution infrastructure). Realization of gasification is usually secured by public tenders, however practice shows it is a very limited market sector…
– Gasification in Russia is supervised by Gazprom daughter company GAZPROM MEZHREGIONGAZ, enacted by Gasification Program of Russian regions, formed on the basis of proposals made by individual regional administrations.
– Gazprom sets its goal to rise gasification in Russia to an 85 % level until 2020. In 2012, this level moves to around 63 % (70 % in towns and 47 % in countryside).
– Investments in 2012 should reach 1,3 bil. USD (in 2005-11, 5 bil. USD were spent for these aims)
– All phases of project realizations are controlled by regional companies – parts of Gazprom Mezhregiongaz.
– The role of the construction work ordering parties was delegated to Regiongazholding and Gazpromregiongaz.
– Gazprom Mezhregiongaz secures financing of the communal gas pipeline construction and deals with regional administrations about work coordination. Investments are spent on: gasification of strategic and priority objects in regions of Far East and Southern Russia, Fulfillment of company duties in terms of contracts with Russian regions, finishing earlier gasification projects, starting of new objects building, elaboration and correction of general schemes of gas supplies and gasification.
– Gazprom is criticized by experts for low investments into gasification, which presents only a small part of financial means invested, for example, into magistral gas pipelines construction.
Regions and their level of gasification
In relation to development level and perspectives, regions can be linked to the 3 following groups:
a) Regions with a developed system of gas pipelines and their connection to the United gas supply system (ESG). They will be supplied with natural gas, connected to energy network. For remote regions, autonomous (with the use of liquefied natural gas – LNG, compressed natural gas and LPG) or complex gasification can be used (gas pipeline and autonomous gasification building at the same time).
b) Regions with a system of local supplies, separated from ESG, or with gas (or gas condensate)
fields. Gasification of these regions will be realized on the basis of existing supply systems or their building and connection to neighboring regions. If there is not a regional supply system built (or it is very poorly developed), autonomous gasification on a permanent basis is recommended.
c) Regions not connected to ESG with neither regional gas supply nor natural gas (or gas condensate) fields. In these regions only autonomous gasification will be constructed.
– Gazprom Gazenergoset (daughter company of Gazprom Mezhregiongaz) is authorized for the building and using of the objects of autonomous LPG and SPG gasification.
Companies that won in public tenders for communal gas pipelines construction in 2011 in individual regions:
– Stroigazmontazh: Kalmykia, Udmurtia, Karachaevo-Cherkessia, Novosibirskaya oblast, Vladimirskaya, Kirovskaya, Kurskaya obl., Altai, Yaroslavskaya obl.
– Tsentrgaz: Astakhanskaya, Kaluzhskaya, Orelskaya obl, Mariy-El republic, Saratovskaya, Tulskaya obl.
– Volgogaz: Ivanovskaya, Ulyanovskaya, Chuvashskaya obl.
– Gazregion: Kurganskaya obl, Bashkortostan, Ryazanskaya, Smolenskaya obl.
In 9 out of 22 regions, Stroigazmontazh company has won directly, in another 7 regions it has won through owned companies (Gazregion, Volgogaz). Tsentrgaz is owned by Gazprom: companies not associated with Gazprom or Rotenberg’s Stroigazmontazh have almost no chance for entry to this market.
Gazregion was formed only in 2010 and constructs gas pipelines in 21 regions, works on gasification objects of Far East and Khanty-Mansiysk AO.
Volgogaz participates in Russian regions gasification program, especially in Central, Volga and Nort-Western Federal Districts.
Structure of Stoigazmontazh company:
– Main business – industrial objects construction (for example it builds almost half of natural gas compression stations in Russia) and magistral natural gas pipelines.
– The company has practically no competitors thanks to friendly relations of company owners (especially Arkadiy Rotenberg) with Vladimir Putin – undoubtedly a huge part of the company success, its profits and contracts. Rotenberg was Putin’s judo sparring-partner in St. Petersburg and after Putin’s coming to power, he became a billionaire due to contracts with state companies (especially with Gazprom).
– The company was only founded in 2007. In March 2008, the company bought several construction companies from Gazprom, since that it creates main Stroigazmontazh assets.
– First Gazprom tender was already won by this company in May 2008.
– Contracts for Sakhalin and Sochi gas pipeline were won by the company without any public tender, others were won in tenders.
– Company earnings in 2010 reached 5 bil. USD (gasification earnings constitutes 500 mil. USD, not even 10 % of all company earnings).
– Founded in April 2000
– Used for gasification objects construction in Russian regions, funded by Gazprom Mezhregiongaz investments.
– Since May 2003, the General director of the company is Sergei Vlasichev, who worked with Seleznev in the Financial-investment company “Management. Investments. Development“.
– The deputy director for construction works is Alexandr Kolodzei
Main contractors and suppliers for Regiongazholding are 4 companies, owned by Stroigazmontazh or Gazprom:
– Spetsgazremstroi – owned by Stroigazmontazh. Takes part in Gasification program and is responsible for almost 75 % of all works.
– Krasnodarstroi – owned by Stroigazmontazh (has contracts in southern part of Russia)
– Volgogaz – owned by Stroigazmontazh (see above)
– Tsentrgaz – owned by Gazprom (see above)
Technical details and requirements for gas pipeline construction you can get via email@example.com
Companies, which are not connected to Gazprom or Stroigazmontah structures are not likely to win in public tenders.
– Personal ties to the top-management of the above mentioned companies is decisive: without any personal contacts there is in fact no chance for success. The best positions are held by personal friends of Vladimir Putin: previoulsy mentioned Arkadiy Rotenberg, business partners of Putin’s university friend Viktor Khmarin (in 2005-2010 Rotenberg and Khmarin companies allegedly won 45 out of 48 tenders of Gazprom Komplektatsiya company for gas pipelines and joining parts). Two thirds of all tenders for Gazprom technical objects constructions and reconstructions were won by Stroigazmontazh and Stroigazkonsalting (owned by Ziyad Manasir) in 2010 (Manasir is a Jordanian businessman with ties to Russian state authorities and Putin’s friends. He founded his company in the mid-90’s and thanks to his contacts to then Prime-Minister Chernomyrdin, he was able to get his first Gazprom contracts. In 2007-09 he bought several construction companies from Gazprom. His success in Gazprom tenders were linked to his alleged friendship with Alexandr Ananenkov, the only Gazprom top-manager, who is linked to former (before Miller’s coming to Gazprom) top-management from the 90’s. In the last 4 years, Manasir’s company got state contracts, valued for 24 bil. USD). 10 % of Stroigazkonsalting was owned by the daughter of Putin’s friend Alexandr Grigoriev (former KGB general). Experts say that the most influential in Gazprom top-management in gasification sector are Alexandr Ananenkov (although he was removed from his former position and now he is “only“ a member of the board), Valeriy Golubiev and Yaroslav Golko.
– Since 2003, Y. Golko was the director of Gaztaged company, daughter company of Gazkomplektimpex (owned by Gazprom), founded immediately after Alexei Miller’s appointment as Gazprom CEO. 25 % of the company was controlled by Boris Rotenberg’s company Baza-torg. Golko’s companies allegedly have ties to 3 Gazprom suppliers – Sfera, Roselektroprom Holding and Mezhregionalnaya Logistcheskaya kompaniya (MLK). Sfera from Tula (Tsentrgas has also its HQ in this city) in 2007-10 won in 5 big Gazprom tenders and its daughter companies as main contractor for construction works. Sfera bought 88 % of Gazstroidetal company and 100 % of Tsentrgazservis (gas equipment supplier, earlier it was part of Tsentrgaz). Both companies were sold by Gazprom. 30 % of Sfera company is owned by Eda company, whose general director is Marina Saltykova, also the general director of Arsiya company, whose only owner is Yaroslav Golko daughter Anna. 20 % of Sfera is controlled by Marina Shalova, general director of AmiTEK company, allegedly owned by Yaroslav and Anna Golko. Sfera Moscow branch had the same address as Golko’s company Stroiinzhiniring. 25 % of Sfera company belongs to Finansy company, controlled by Mikhail Borshchev, former general director and member of the board of Tsentrgaz (Golko is also member of board).
– Similar contacts and ties between companies, connected to Gazprom and its contracts, hold allegedly also other Gazprom top-managers (some say, especially Golubiev and Ananenkov).
– Alexandr Ananenkov already in 2001 founded Fund of social-economic support for veterans in North. Its president and co-founder is Alexandr Sinelnikov, who is a former business partner of Ananenkov’s son Sergei. 6 companies are found between companies that won Gazprom contracts and also have ties to this Fund (MO Gaztsentr, Biznesgrupp, Spoilex, Energoservis).
Conclusion and recommendations
Analysis clearly shows how much the state gasification sector is closed to any company which doesn’t have ties to top-managers of the above mentioned state companies or owners of “friendly“ private companies. It is an informally closed market with access only to “chosen“ companies. The only possibility left is retail business in the sector of autonomous gasification without a connection to communal or magistral gas pipelines, aimed at connections of individual houses to natural gas alternatives. However, this market sector is directed at companies other than those, seeking to participate in gasification (oil pipeline producers). At your request, we can give you an exact analysis of the autonomous gasification market in Russia! Don’t hesitate and contact us via firstname.lastname@example.org.