Gazprom has decided to conduct an audit of its export intermediaries, most likely because of the unusual scheme used by Tancredo Enterprises, a firm co-owned by a Gazprombank subsidiary. Eight years ago, a similar check cost Gazexport chief Yury Vyakhirev his post, but Gazprom managers do not expect any major resignations this time.
Gazprom is conducting an internal audit of export schemes to sideline unnecessary intermediaries, a manager at the state-run gas export monopoly told Vedomosti. Interfax reported the same information, citing a company source. A Gazprom spokesperson said "planned work" was being done.
Prime Minister Vladimir Putin's spokesman, Dmitry Peskov, said only that the government's "general trajectory is to eliminate unnecessary intermediaries and move all contracts to a direct and transparent track."
None of the people who spoke to Vedomosti would say what the check's outcome would be. The last such probe at Gazprom that became known to the public ended in scandal in 2002.
In 2001, when Alexei Miller had just taken the helm at Gazprom, then-President Putin told him how to challenge the previous management's legacy. The first order of business was getting rid of middlemen who were reselling Russian fuel abroad at a higher price.
"So why are we selling for so cheap?" Putin asked Miller. "Where's the difference? Where's the money?"
Miller promised to get rid of the intermediaries, and the following year an audit was conducted at Gazexport — now known as Gazprom Export — on its operations from 1998 to 2001. The special commission from Gazprom found, for example, that "unexplained sums" from accounts receivable were written off from Gazexport's balance sheet, even as a subsidiary was allowing East European customers, such as Bulgaria's Overgas, Yugoslavia's Progressgas Trading and the Polish firms Bartimpex and Gas-Trading, to not pay for deliveries for up to half a year — resulting in losses of about $144 million.
After the checks, Gazexport chief executive Yury Vyakhirev — son of Miller's predecessor at Gazprom, Rem Vyakhirev — resigned, although he denied that it was connected to the audit. Officials at Gazprom and Gazexport said they did not think that his departure was a coincidence, however.
It remains unclear what precipitated the new audit. The only explanation so far was posited by two sources close to Gazprom's management, who said the check was in response to the export scheme of Cyprus-registered Tancredo Enterprises, which is part-owned by a Gazprombank subsidiary.
In October, two sources at Gazprom-controlled companies described the situation to Vedomosti. Gazprombank-controlled Sibneftegaz is selling gas to Gazprom firms, which are exporting the fuel and selling it to Tancredo. Tancredo, in turn, is selling the gas back to Gazprom at European prices, which are almost five times higher than prices in Russia.
The scheme involves a number of legal entities. Two individuals, citing data from Gazprom, were able to explain the details, but Vedomosti was not able to confirm the information.
Since 2007, Gazprombank-controlled companies have been selling Sibneftegaz's gas to Gazprom subsidiaries for $23 per 1,000 cubic meters. The Gazprom units resold the gas to Gazprom's German subsidiary, ZMB GmbH, for $180 at the Belarussian border. That company delivered the fuel to Germany and sold it to Tancredo for $213, after which Gazprom Export took a $1 agent's fee to sell the gas for $259.
Thus, Tancredo was earning about $46 per 1,000 cubic meters. For comparison, Gazprom's average price in 2007 was $51 per 1,000 cubic meters in Russia, and $269 in Europe.
It is unclear how much gas was sold under the scheme. In December 2008, Gazprom was planning to spend nearly 89 billion rubles, or about $3 billion now, over the following three years to buy gas from Tancredo in Germany.
Unlike in 2002, however, the "streamlining" of exports is being conducted by Gazprom Export chief Alexander Medvedev, not a special commission of auditors, a Gazprom manager said. Another source in the company said Gazprom managers were not expecting any shocking decisions.
So far, it has been decided only to liquidate ZMB, which in 2009 was merged with its parent company, Gazprom Germania, the second source said. Besides, almost all of the companies that buy Gazprom's gas in Europe are formally intermediaries. Germany's E.On resells fuel in Germany, Austria, Hungary and other countries.
Medvedev is also unlikely to leave, the two sources close to Gazprom's management said.
Vedomosti was unable to reach Medvedev for comment. A spokesperson for Gazprombank declined comment.
Throughout the European Union, Gazprom's gas is purchased by traders, including some in which Gazprom has a stake, such as Hungary's Panrusgaz (in which Gazprom has 40 percent) and Bulgaria's Overgas (in which it has 50 percent). The best-known intermediary in recent years was the Swiss-registered RosUkrEnergo, which was cut out of the gas trade last year but has yet to be liquidated.