Geopolitical analysis of Gazprom
INTRODUCTION
Open Joint Stock Company Gazprom is the largest extractor of natural gas and one of the largest companies in the world. Gazprom was created in 1989 when the Ministry of Gas Industry of the Soviet Union transformed itself into a corporation, keeping all its assets intact. The company was later privatized in part, but currently the Russian government holds most of the control in its hands.
The major parts of Gazprom’s production fields are located around the Gulf of Ob in the Yamalo-Nenets Autonomous Okrug in Western Siberia, while the Yamal Peninsula is expected to become the company's main gas producing region in the future. Gazprom possesses the largest gas transport system in the world, with 158,200 kilometres of gas trunk lines. Major new pipeline projects include Nord Stream and South Stream.
In this report, we are going to analyze the International environmental of Gazprom by using SWOT analysis. We will detail the relationship between Gazprom and other neighboring countries; such as Ukraine. We will figure out what’s the benefit for Gazprom based on the International environmental and what will be harmful the Gazprom if there are some disputes.
The main reason we chose Gazprom as our research target is, as we mentioned before, that Gazprom is a company which is currently controlled by Russian government. Most of decisions that Gazprom took are showing the attitude of Russian government. As we know, Russia is the biggest country in the World, not only the biggest land, Russia also has one of the most powerful military force in the World. We can easily find the attitude towards the World or other neighboring countries from Russian government by analyzing the decisions taken by the company.
We'll begin with a SWOT analysis of the company, and also talk about the stakeholders, and the feasible future solutions.

STRENGTHS
· Largest reserves of mineral and energy resources in Russia
Russia has the world's largest reserves of mineral and energy resources, is the biggest oil and gas exporter. Gazprom is controlled by the government; they do not need to worry about the resource exhaustion in a long time.
· Strong position in politics and economic
The UGSS is the world’s largest gas transmission system and represents a unique engineering complex encompassing gas production, processing, transmission, and storage and distribution facilities. It assures continuous gas supply from the wellhead to the ultimate consumer. The UGSS includes 168.3 thousand kilometers of gas trunk lines and laterals, 222 line compressor stations with 3738 gas compressor units totaling 43.87 thousand MW in capacity; 25 underground gas storages. With this system, Gazprom sells natural gas to almost all European countries.

They are not only making money out of this gas transport system, they also get power from it. We can image what could be the repercussions if they stopped transferring natural gas because of political problems between Russian government and another one. How could the people live in that country without using gas? There is a good example of this topic: Gazprom stopping transferring gas to Ukraine in January, 2009. There are three main causes. First cause is a debt problem, Ukraine didn’t gas the gas debt of about 2.1 billion dollars in time to the Russian company, and the negociations about gas prices and transit fees are down. The second reason is political rivalry; Ukraine is a member of NATO, they want to get more financial support and stronger power from America. The third reason is about history, Ukraine is the birthplace of Russia and they have almost fought for 300 years.
WEAKNESSES
· Government control
Due to the Russian government control Gazprom assets, Gazprom can’t solve any matter on their own. Gazprom represents the attitude of Russian government, they can’t control their financial statement, it has caused producing problem for them. And Gazprom takes more risks too with countries that are hostile to the Kremlin. Like we mentioned the dispute between Russia and Ukraine, it made the other 18 European countries short of natural gas for several days. As a company, it influences its reputation and also the future cooperation relationship. If another country gets tired of political tensions, they will try to find another company and put pressure on Gazprom by renegociating their prices.
· Declining proven reserves and technology problems
In the West Siberian oil belt, proven reserves of oil are declining, most developed oilfield are into production decline stage. Due to the geological exploration works are not followed up in a timely manner, new storage proven is lagging behind.
The new explored areas mostly small oilfields, mining blocks, these oilfields are difficult to develop. And these types of oilfield accounted for more than half of the oil and gas proved reserves in Western Siberia.
OPPORTUNITIES
- The growth of the economy in western Europe needs more and more resources, and tensions in the Middle East could let Gazprom increase its growth in the European Market.
- with the help of Russian government, they have a lot of funds and can finance a nearly unending construction of pipelines, which would help them to grow.
- they also have the money to search new resources nearly everywhere on Earth, even at the poles. Also, they do not really care about ecologist movements like Greenpeace, that are totally against such things because they can accelerate global warming.
- with the new SOUTHSTREAM pipeline, they can control all the natural gas of Kazakhstan and the Caspian See.
- And, with the new NORDSTREAM pipeline, Gazprom (and by the same way Russia) is being a lot more influent in Germany.
- They can lower the tension between Russia and Japan by selling natural gas to them(in fact, this country needs natural gas and has been overlooking some companies, in which is Gazprom)
- China and India are close neighbors (in terms of geography and also alliances), and their market can become huge if they decide to consume a cleaner and more ecological alternative.

THREATS
Gazprom, the Kremlin-controlled Russian giant, is facing a barrage of European Union charges. There are more and more competitors and even Ukrainians are escaping from Gazprom contracts. One problem Gazprom has to face is the unchanging image as the primary instrument of Russian capitalism.
Gazprom has to maintain production levels. To do so, the capital investment will have to be of $730 billion.
Domestically, they have two threats, Novatek, a natural gas producer, and Rosneft, a government-owned Russian oil company. These two companies threaten to cut Gazprom’s domestic market share while trying to steal even more export markets.
European gas demand has for long been met and supplied by Gazprom, however the arrival of Shale Gas in the new couple years could cause Gazprom to lose a lot of its European market. Shale Gas can produce huge volumes of gas to meet the new rising gas demand.
In addition to all of this, Gazprom has to face the regulations that are being put into place (for example to save the environment).
Another threat is the complex fluctuation of the price of oil and natural gas.
Issues
Gazprom is often poorly managed. They used to be the third-most valuable company in the world with a market capitalization of $350 billion. It has shrunk to $120 billion and their profit is decreasing ($1.4 billion last quarter of 2012). The company is expected to lose many billions of dollars every year.
Independent gas producers, such as Novatek, produce gas for cheaper, and they are selling more and more on domestic grounds, unlike Gazprom which are losing terrain.
Often many of the highly ranked workers will be from the government. In 2011, the chairman of the board of directors was the former Prime Minister Viktor Zubkov. Putin appointed in 2011 Alexey Miller deputy of board. However most of these people do not know how to control a company and that result in bad results, the only reason they were put in those positions was for Putin to have control over Gazprom.
Gazprom wants to update some of their systems, but to do so would mean interrupt and disrupt some of their gas transition to Europe.
Many regions are considered troubled debtors by Gazprom, even its own Moscow. Gazprom shut off back in 2009 gas supplies to Ukraine because of debt issues. Gazprom has a hard time cooperating with other countries as often they are in debt and cannot be trusted.
STAKEHOLDERS
The PRIMARY ones are:
- the Russian Republic; in fact Russia gives a lot of funding to Gazprom and in exchange the extremely powerful company is used in political talks by the Kremlin.
-the pipeline transit state that is Ukraine; in fact Ukraine as a transit state can have better prices than the others. But being dependant can turn out to be a big issue (like in january 2009).
-the consumers (especially in Europe): in fact, if they begin to extract shale gas, Gazprom would lose an enormous market, so they need to be careful on this market.
The SECONDARY ones are:
- China and India; in fact they are an amazing emerging market with a population of more than 2.5 billions inhabitants ; bilateral contracts between Russia and them could be really interesting. But so far, the influence of those countries on Gazprom is barely noticeable.
-Central Asian producing countries: in fact, they would like to have a little more independance from Gazprom but Russia's powerful influence in the area and the fear of punitive measures do not create any problem for Gazprom.
SOLUTIONS
As everybody know, Gazprom is not a leader in ecological energy but the natural stocks of fuel and natural gas are not unlimited and a big company like Gazprom has to anticipate the future and begin to change its strategy.

-Gazprom has to change its market position because the company is very dependant of the EU for its exportations and as we could see with the Georgia war of 2008 the diplomatic relations between UE and Russian Federation are very tense and for a big company like Gazprom it's an obligation to be positioning on other markets like Asia.

-To be competitive the company has to its means of productions and has to use more ecological process to produce green energy . For example wind turbines could be developed and be used in windy places on the huge territory of the Russia to be more efficient .
- Gazprom could also, in a short-term vision, develop its gas fields in Siberia, because they do not use all the potential of the fields in the region.