Friday, 9 November 2012

Putin's money machine is crumbling

Putin's clocks are ticking ....

The American led shale gas revolution is taking its toll on Putin's money machine, Gazprom:
From the Baltics to the Mediterranean, Russia’s Gazprom has long been the dominant supplier of natural gas to heat homes, run factories, and generate electricity. Even if its European customers grumbled about high prices, they didn’t do it too loudly: Gazprom could cut them off, as Ukraine learned during its price disputes with the company between 2005 and 2010.
A global production boom led by U.S. shale gas has turned the tables. While the U.S. is now awash in cheap gas, Gazprom’s European customers pay about three times the U.S. price. European utilities are demanding—and winning—price concessions that are clobbering Gazprom’s bottom line. On Nov. 2, the company reported second-quarter profits down 50 percent, as discounts to clients reached $4.25 billion so far this year.

As recently as a decade ago, Gazprom accounted for almost half of Europe’s gas imports. That figure has since fallen to about 33 percent, as customers switched to Norwegian or Algerian gas—and, more recently, to imported American coal, which has become plentiful because U.S. utilities are burning cheap gas instead. Even Vladimir Putin has acknowledged something has to change. Gazprom, he said at an energy meeting near Moscow on Oct. 23, must “find new, mutually acceptable forms of cooperation to be closer to the end users.”

Read the entire article here

This the beginning of the end for the former KGB agent turned dictator. Putin is now desperately trying to make Rosneft, another energy company, his new milk cow, but it is highly unlikely that he will succeed. 


Fifth Estate said...

Great analysis. Hope you don't mind me linking to your blog at Thanks for all your contributions!

Dani C

NNoN said...


Thank you for your nice comment. Feel free to link to my blog!