Alexey Miller, Gazprom’s chief executive, fired another warning shot at the European Union at Gazprom’s annual shareholder meeting last Friday.
In his speech to the meeting, he accepted that the company was being tested by “unfavorable global financial and economic trends” but said “our company once again proved itself to be highly reliable, stable and able to achieve sustainable development.”
A long-term business strategy that we have been recently implementing has been – and remains – true. Our challenge today is to preserve the accumulated potential and not to miss the new opportunities that emerge in times of crisis.
The good news is that the worst of the downturn seems to be over:
The situation has both stabilized and acquired a positive momentum in the past few months: we are witnessing a steady rise in prices and volumes of hydrocarbon consumption. This gives us grounds for believing that we have already passed the bottom of the energy crisis. And although we still witnessed a considerable reduction in exports in the first quarter of 2009, current foreign client orders have all but returned to last year’s levels.
There was also a bullish statement on investment, in spite of recent project delays:
We have repeatedly stressed that the crisis will not affect our investment program. As incredible as it may seem, but this really is the case. Unlike many other companies that wound up being physically unable to finance their projects, we are adjusting our plans not because we are unable
to find the sufficient amounts of money, but because our planned capacities will not have be required.
That line about the need for Gazprom’s gas was critical, he made clear.
Europe has recently developed a taste for talk about energy resource diversification, which is expected to improve both market competition and the reliability of natural gas supplies. But securing the physical access to new resources – through new gas transportation corridors, for example – does not mean the automatic emergence of reliable long-term sources of energy.
Other countries, he went on, are much less reliable gas suppliers that Russia
Many countries with a considerable volume of hydrocarbon reserves have only the smallest of export potentials. This is caused by several factors that include domestic demand, political instability, and an absence of experience in developing and operating oil and gas infrastructure and servicing contracts.
And then the punchline:
For this reason, while Europe’s desire to diversify its gas suppliers is understandable, it must not develop into a fetish. The priority European policy assigns to securing access to new resources at the expense of developing relations with its traditional suppliers such as Russia may lead to paradoxical results. There will more diversification – but less reliability.
Meanwhile, he added, “Gazprom for its part is paying close attention to projects that create new markets for the company.”