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Leonid Bershidsky

Putin's Energy Giant Falls on Hard Times

Gazprom is squeezed on all sides.
Did too much geopolitics spoil Gazprom?

Did too much geopolitics spoil Gazprom?

Photographer: Oliver Bunic/Bloomberg

Years of mismanagement and politically driven expansion are catching up to the Russian state-owned natural gas company Gazprom. Output this year is forecast to be the lowest in its history, pipeline projects are floundering and it's not doing well in Europe, its key market. 

In June 2008, when Gazprom's market value reached $360 billion, Chief Executive Officer Alexei Miller predicted the company would be the world's biggest enterprise, worth $1 trillion, in seven or eight years. Miller, who worked with President Vladimir Putin in the St. Petersburg mayor's office in the 1990s, was proud of what he had achieved since taking over in 2001. He returned valuable assets stripped from the company by previous managers, expanded production and increased Gazprom's revenue to $94 billion from $21 billion. Miller could be excused for thinking the sky was the limit.