CEP20021115000292 Moscow ITAR-TASS in English 1639 GMT 15 Nov 02
[FBIS Transcribed Text]
By Anton Uskov
MOSCOW, November 15 (Itar-Tass) -- A domestic gas market in Russia will be the first step in the gas industry reform, a source in the Russian government said Friday. Gazprom giant will retain the right to be the sole gas exporter from Russia, he remarked.
"This must be done in order not to ruin the selling markets abroad," the source said.
Other companies should get an opportunity to sell gas on the domestic market at prices they think best, the source said. He said he was concerned about burning of large amounts of casing head gas in the production of oil, because the country is lacking a sufficient number of enterprises to upgrade casing head gas to the natural gas level.
The cabinet will discuss the Russian energy strategy in February 2003. It will decide which types of fuel and in what amount Russia needs and how the domestic energy industry will develop.
[Description of Source: Moscow ITAR-TASS in English -- main government information agency]
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Document ID: CEP20021220000188
Entry Date: 12/20/2002
Version Number: 01
Moscow Daily: Gazprom Head Miller's Telegram Indicates Possible Gas Shortages
CEP20021220000188 Moscow Nezavisimaya Gazeta in Russian 12/20/2002 PP1,3
Russia: Gazprom Document Suggests Bankruptcy 'Approaching Inexorably' CEP20021217000273 Moscow Nezavisimaya Gazeta Russian 17 Dec 02
[Article by Andrey Savitskiy: "Gas Bubble II. Miller Is Not Running Out of Money Only But Also of Gas" -- taken from HTML version of source provided by ISP]
[FBIS Translated Text]
The article published by Nezavisimaya Gazeta recently on Gazprom's impendent bankruptcy ("Gas Bubble," Nezavisimaya Gazeta of 17 December) has raised much clamor. The article was reprinted by the world's leading news agencies and newspapers, primarily German, such as Die Welt and Handelsblatt (which is quite understandable, as Germany is more dependent on supplies of our gas than other countries).
Some of those reports had even an apocalyptical nature, suggesting a threat of an imminent energy crisis connected with by Gazprom's possible bankruptcy.
Nevertheless, as Nezavisimaya Gazeta's further investigation has shown, the situation of the gas concern is even more alarming than it might have appeared from the article "Gas Bubble."
This article caught Aleksey Miller in Tashkent, where the gas concern chief was buying gas. Why would a major gas extracting company that reportedly has the world's largest gas reserves need Uzbekistani gas? It seems that Gazprom is not having problems with money shortages only.
One week before Miller's trip to Uzbekistan, an unprecedented telegram from Gazprom was disseminated among regional subdivisions of the gas concern on behalf of the management board chairman. Many Nezavisimaya Gazeta own correspondents in various regions managed to obtain the text of this message. It was sent on a government letterhead, which emphasized its special status. The telegram's introduction, too, is quite unusual for a technical directive: "In conditions of a widespread cold snap this December..."
So, it turns out that "in conditions of a widespread cold snap" the established daily gas consumption limits were overrun in most regions of the Russian Federation. In this connection, Management Board Chairman Aleksey Miller obligates leaders of his regional gas selling subunits, "on their own responsibility, to carry out gas supplies in the winter period of 2002-2003 to all consumers without exception within the established daily gas consumption norms and without waiting for special instructions on this." Translated into plain terms, this means the following: There is a shortage of gas, which is why you can curtail the supplies to absolutely everyone, including the population.
There is one simple factor proving that we are dealing here specifically with a shortage of stockpiles. The phrase about compliance with the limits, which is cited from this strange telegram, does not mention payments. Earlier, gas supplies to consumers were reduced if the latter did not pay. Now, Miller orders to limit gas supplies to the established norms regardless of payments.
This means that the situation is bad and the concern is trying with all its might to save gas and to consume it in compliance with the planned limits regardless of industrial needs and winter temperatures. After all, if due to the cold and miscalculations the reserves run out before spring, the supplies to consumers will have to be actually cut off.
There are many things Russia is short of, but it has always had gas in abundance. And all of a sudden, it proves in short supply. It is going to be an unprecedented scandal. An excellent gift to the Kremlin in a pre-electoral year. In this case, punishment will hit Gazprom management much sooner than bankruptcy. In other words, if the huge money (exceeding the annual indebtedness of the entire Russia) and money shortages may still allow for maneuvering somehow within one year, the cold weather and gas shortages may open the abscess within the next several months.
What caused this problem? Earlier, under the old team of technical specialists, Gazprom had a thick volume containing calculation methods, which was drafted based on long-time experience. It was used to calculate a consumption forecast, according to which required reserves of gas were pumped into underground depositories. There were, of course, local shortages: Reserves on one side and "unplanned" frost on the other. In any case, however, there was a rigid rule: If ever, gas supplies were cut off only to the so-called industrial zone and on no account to the population. There were distinct priorities, which the above telegram does not mention. If Miller orders to limit supplies to "all consumers without exception," this indicates a difficult condition of his company.
The Gazprom leader may not be a sectoral specialist but his deputy, Aleksandr Ryazanov, is a professional gas expert. In the past, he headed the Surgut refinery almost for 10 years. By the way, back then Ryazanov was in conflict with SIBUR and even spent some time behind bars at a detention center. Eventually, however, he was ousted from the refinery by well-known Goldovskiy. But this is not a reason for taking one's revenge on the whole country, for crying out loud...
Anyway, the winter stocks of gas may prove, to put it mildly, insufficient as a result of actions by Gazprom management. The Miller team can only pray for warm weather.
Postscript: Nezavisimaya Gazeta intends to continue its investigation into the situation at Gazprom and other corporations vitally important for the country, as well as some leading state banks, such as Sberbank, Vneshtorgbank, and Vneshekonombank.
[Text of telegram] "Government telegram. To the leaders of gas extracting and gas transportation companies of OAO [open joint-stock company] Gazprom (to be delivered)
In conditions of a widespread cold snap this December, most regions of the Russian Federation have been overrunning the established daily gas consumption limits.
To prevent the single gas supply system from malfunctioning due to uncontrolled gas consumption, I obligate the senior leaders of regional gas selling companies and branch offices of OOO [limited liability company] Mezhregiongaz, on their own responsibility and jointly with gas extracting and gas transportation companies of OAO Gazprom, to carry out gas supplies in the winter period of 2002-2003 to all consumers without exception within the established daily gas consumption norms and without waiting for special instructions on this.
The operational redistribution of gas volumes among consumers, allowing for the settlement of their current payments in cash for the gas supplied, will be carried out in compliance with OAO Gazprom Order No. 100 of 14 October 2002, the established procedure for distribution of OAO Gazprom's gas resources No. AM-6671 of 29 October 2002, as well as the regulations on interaction among the TsPDU [Central Production and Control Administration], gas extracting and transportation organizations, and OOO Mezhregiongaz.
Please communicate the text of this telegram to the leaders of components of the Russian Federation, operational personnel of lower subdivisions in the regions, and OOO Mezhregiongaz branch offices.
[Signed] A.B. Miller, OAO Gazprom Management Board Chairman."
[Description of Source: Moscow Nezavisimaya Gazeta in Russian -- Daily Moscow newspaper aimed at an elite audience and controlled by Boris Berezovskiy.]
Document ID: CEP20021218000187
Entry Date: 12/18/2002
Version Number: 01