Inception (1989 - 1992)[edit]
In 1943, during World War II, the government of the Soviet Union created a gas industry. In 1965, it centralized gas exploration, development, and distribution within the a Ministry of Gas Industry. In the 1970s and 1980s, the Ministry of Gas Industry found large natural gas reserves in Siberia, the Ural region and the Volga region. The Soviet Union became a major gas producer.[5]
In August 1989, under the leadership of Viktor Chernomyrdin, the Ministry of Gas Industry was renamed the State Gas Concern Gazprom and became the Soviet Union's first state run corporate enterprise.[6][7]
In late 1991, when the Soviet union dissolved, gas industry assets were transferred to newly established national companies, such as Ukrgazprom and Turkmengazprom.[8] Gazprom kept assets located in Russia and secured a monopoly in the gas sector.[7]
Privatisation (1993 - 1997)[edit]
In December 1992, when Boris Yeltsin, the Russian President appointed Chernomyrdin, Gazprom's chairman his Prime Minister, the company's political influence increased. Rem Viakhirev took the chairmanship of Gazprom's board of directors and managing committee.[7]
Following the Decree of the President of the Russian Federation of 5 November 1992, and the Resolution of the Government of Russia of 17 February 1993, Gazprom became a joint-stock company. It began to distribute shares under the voucher method. (Each Russian citizen received vouchers to purchase shares of formerly state-owned companies).
By 1994, thirty-three percent the Gazprom's shares had been bought by 747,000 members of the public, mostly in exchange for vouchers. Fifteen percent of the stock was allocated to Gazprom employees. The state retained forty percent of the shares. That amount was gradually lowered to thirty-eight percent.[7]
Trading of Gazprom's shares was heavily regulated. Foreigners were prohibited from owning more than nine-percent of the shares. In October 1996, one percent of Gazprom's equity was offered for sale to foreigners as Global Depository Receipts. In 1997, Gazprom offered a bond issue of US$2.5 billion.
Tax evasion and asset-stripping (1998 - 2000)[edit]
Chernomyrdin, as Prime Minister of Russia, ensured Gazprom avoided tight state regulation. The company evaded taxes and the Government of Russia received little in dividends. Gazprom managers and board members, such as Chernomyrdin and the Gazprom chief executive officer, Rem Viakhirev, engaged in asset-stripping. Gazprom assets were shared amongst their relatives. Itera, a gas trading company also received Gazprom assets.[9] In March 1998, for reasons unrelated to his activities at Gazprom, Chernomyrdin was fired by Yeltsin.[10] On 30 June 1998, Chernomyrdin was made chairman of the board of directors of Gazprom.
Putin's reforms (2000 - 2003)[edit]
When, in June 2000, Vladimir Putin became the President of Russia, he acted to gain control over Russia's oligarchs and increase the Government of Russia's control in important companies through a program of national champions.[11] He fired Chernomyrdin from his position as the chairman of the Gazprom board. The Russian Government's stock in Gazprom gave Putin the power to vote out Vyakhirev. Chernomyrdin and Vyakhirev were replaced by Dmitry Medvedev and Alexei Miller. They were Putin's prior employees in Saint Petersburg.[11] Putin's actions were aided by the shareholder activism of Hermitage Capital Management chief executive officer William Browder and the former Russian finance minister Boris Fyodorov. Miller and Medvedev were to stop asset stripping at Gazprom and to recover losses. Itera was denied access to Gazprom's pipelines and came close to bankruptcy. Itera agreed to return stolen assets to Gazprom for a fee.[12]
Establishment of government control (2005 - 2006)[edit]
In June 2005, Gazprombank, Gazpromivest Holding, Gazfond and Gazprom Finance B. V., subsidiaries of Gazprom, sold a 10.7399% share of their stock for $7 billion to Rosneftegaz, a state owned company. Some analysts said the amount paid by Rosneftegaz for the stock was too low.[13] The sale was completed by 25 December 2005. With the purchased stock and the thirty-eight percent share held by the State Property Committee, the Government of Russia gained control of Gazprom.[14] The Government of Russia revoked the Gazprom twenty percent foreign ownership rule and the company became open to foreign investment.[15][16]
On 5 July 2006, the Federal Law, On Gas Export, was passed, nearly unanimously, by the State Duma. On 5 July 2006, the law was passed by the upper house and on the 7 July 2006 by the Federation Council. On 18 July Putin signed the new legislation and on 20 July 2006, the law was published. It gave Gazprom the exclusive right to export natural gas from Russia.[17][18][19][20]