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What’s in store for Russia’s

The prospects are there for a change of guard. But one thing is constant: Ordinary workers face extraordinarily harsh conditions, sometimes operating in deadly-cold environments


A worker welds a pipe forming a pipeline intented to bring gas from wells across the Yuzhno-Russkoye gas field in the Yamal-Nenets Autonomous District, Russia, in February.


On a frigid evening in February, the hottest place to be was the Kremlin Palace theater. The draw inside the towering hall wasn’t Tina Turner or Deep Purple — rock icons well past their prime — but Gazprom, Russia’s most powerful corporate leviathan, which was celebrating its 15th anniversary.

Gazprom certainly had reason to party: Its chairman, Dmitri Medvedev, was riding high on the Russian campaign trail as the hand-picked successor of Russian president Vladimir Putin. Although Gazprom forked over a handsome sum to book Turner and Deep Purple, Medvedev’s favorite band, the opportunity for the company, the world’s biggest producer of natural gas, to have its own man installed as Russia’s next leader was priceless.

“The gig at the Kremlin was fun, but it wasn’t wild,” Ian Gillan, Deep Purple’s frontman, wrote in an article for the Times of London after the show. “The young guys and more junior staff were all up on their feet, although they were looking nervously over at their bosses to see whether they could loosen their ties. It was as if they were asking, ‘How much fun are we allowed to have?’”

Medvedev was sworn in as president on Wednesday, after winning the election in early March, and his ascent confirms that in today’s Russia, the line separating big business and the state is becoming so fine that it’s almost nonexistent.

Gazprom and the government have long had a close relationship, but the revolving door between them is spinning especially fast this year: Medvedev, 42, replaces Putin as president; Putin becomes prime minister, replacing Viktor Zubkov; and Zubkov is expected to take Medvedev’s place as Gazprom chairman at a general shareholders meeting next month.

Medvedev and Putin “are as close to a dream team as Gazprom could ever hope for,” said Jonathan Stern, a British energy analyst and author of The Future of Russian Gas and Gazprom.

It’s hard to overemphasize Gazprom’s role in the Russian economy. It’s a sprawling company that raked in US$91 billion last year; it employs 432,000 people, pays taxes equal to 20 percent of the Russian budget and has subsidiaries in industries as disparate as farming and aviation.

The company is a major supplier of natural gas to Europe, and it is becoming an important source of gas to fast-growing Asian markets like China and South Korea. In 2005, at the urging of the Kremlin, it bought Russia’s fifth-largest oil company from the tycoon Roman Abramovich. If crude oil and natural gas are considered together, Gazprom’s combined daily production of energy is greater than that of Saudi Arabia.

With energy prices continuing to hit record highs, Gazprom is more influential than ever, both at home and abroad. Gazprom says that before 2014 it will surpass Exxon Mobil as the world’s largest publicly traded company — a goal that Medvedev himself endorsed before he became president.

When Putin was still president, he used Gazprom’s wealth and economic might to fight political enemies inside Russia, to reassert influence over former Soviet republics, to gain leverage over Western European countries by increasing their dependence on Russian gas and to wrest Russian energy assets back from foreign companies.

Now that Russia is seeking to reclaim the geopolitical clout it had in Soviet days, it is wielding its vast energy resources, rather than missiles, to reassert itself. More often than not, its most potent artillery is Gazprom itself.

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