The Guardian: Darker days ahead as residents are cut free in town that Gazprom built

EXTRACTS: On the one hand, the state-controlled company, increasingly seen as an instrument to project the Kremlin’s power, is hungry for assets, as the latest showdown with Shell over the Sakhalin-2 project demonstrates.

At the top the company appears indivisible from the state: Kremlin spokesmen explain its decisions; its chairman, Dmitry Medvedev, happens also to be a deputy prime minister.

THE ARTICLE

Mark Rice-Oxley in Novy Urengoi
Thursday December 14, 2006

In the frigid emptiness of northern Siberia, where the winter dusk descends soon after lunch and darkness lingers until after breakfast, there’s an old vodka toast that locals raise to take the edge off the Arctic chill: “Za nas, za vas i za gas” – to us, to you and to gas.

In truth, there’s little else to drink to. Winter howls for nine months in Novy Urengoi; summers are hot, short and beset by mosquitoes. The nearest city is hundreds of miles away and visitors are rare – it is a closed city only accessible with special permission. Food has to be freighted up from more fertile climes. Sunlight is so ephemeral that children are prescribed solarium sessions to add colour to sickly complexions. These are people who don’t get out much.

Not that the 100,000 inhabitants of Novy Urengoi are deprived. This is the gas capital of a gas-powered country and has always been well looked after. There is gas money everywhere, in the buildings and offices, and in the local salaries, which are far higher than the national average. There is gas money in the nurseries, schools and shops, not to mention the gleaming headquarters of Gazprom, Russia’s great gas mothership.
But how much longer gas money continues to subsidise life in a place like Novy Urengoi is another matter. Gazprom, sometimes described as a “state within a state” because of its cradle-to-grave support for workers, families and dependents, is changing.

On the one hand, the state-controlled company, increasingly seen as an instrument to project the Kremlin’s power, is hungry for assets, as the latest showdown with Shell over the Sakhalin-2 project demonstrates. Gazprom’s flagship field in Novy Urengoi is 70% depleted. Replacements are needed for a company that supplies a third of western Europe’s natural gas. It has also been spending heavily on pipelines, and acquiring media assets, including newspapers, aggravating western fears that it is not so much a “state within a state” as the state itself.

On the other hand, Gazprom has quietly begun cutting back on the Soviet-style paternalism for which it is renowned, hiving off “social assets” such as nurseries, subsidised housing and sanatoriums. Already almost half of its 9,320 “social properties” have been handed to local authorities. The mothership is sailing, and some of her dependants are to be left to fend for themselves.

Riches

All of which is very worrying if you are Viktoria Petrenko, principal of the Zolotaya Rybka (Goldfish) nursery in Novy Urengoi. Here the riches of gas are palpable: the Sony home TV theatre and music centre, the sports hall and gymnastics room, separate dormitories for the different age groups from 18 months to seven years, 73 staff including a psychologist, a doctor, and sports and music instructors for 250 children, who get five meals a day. And all for 800 roubles (about £16) a month.

It is not difficult to understand what might happen if Gazprom cuts them free. Municipal Russian kindergartens are rarely such uplifting affairs.

“They look after us,” said Ms Petrenko, showing off the cavernous sports hall and soft-play centre. “In winter it’s 15 degrees in here and minus 50 degrees outside. You see what they’ve done. They have built sports halls, they sponsor competitions and festivals, they really invest in their children.” It is Gazprom’s answer to Russia’s demographic crisis, she added: investment in the future generation that Russia needs to halt an alarming population decline. “We hope we stay a part of Gazprom. We are a Gazprom nursery.”

The hopes may be in vain. The Goldfish nursery appears to be exactly the type of facility pencilled in for transfer to local authorities. A Gazprom spokesman, Sergei Kuprianov, said the plan was to hand over all social projects bar those that would collapse without Gazprom support. “When we see local municipalities are able to support the structures and have enough money we will hand them over,” he said.

Created in 1992 from the old Soviet energy ministry, Gazprom is a formidable Soviet throwback to the days when the state ran people’s lives and nothing was private. At the top the company appears indivisible from the state: Kremlin spokesmen explain its decisions; its chairman, Dmitry Medvedev, happens also to be a deputy prime minister.

The company is so complex that most of its staff do not even pretend to know how it works. It is landlord, banker, doctor and travel agent to many of its staff. It runs an airline, insurance company, and holiday homes on the Black Sea for those desperate to escape the bleakness of the north. It operates spas and children’s recovery centres, builds sports and cultural centres, museums, stadiums, and in Novy Urengoi has its own TV production company, unsurprisingly called Gazprom TV. It even dabbles in art curation and cultural heritage projects.

But it is now publicly quoted and aware that investors, Russian and foreign, do not like seeing their money frittered away on ice hockey palaces and holiday resorts. That is why it is trying to offload social assets, executives say: making Gazprom more of a company and less of a community.

But in Novy Urengoi locals find it hard to see where Gazprom ends and civic life begins. Here people are unmoved by the latest twists in the Litvinenko case or the physical properties of polonium-210. But gas is different. It is down there, 10 trillion cubic metres ofthe stuff, under the permafrost and sand on which Novy Urengoi improbably lies. “We’re just like the United Arab Emirates,” quips local official Svetlana Umanskaya. “Built on sand and gas.”

Ties that bind

The fear is that cutting off the services will unpick the ties that bind Gazprom to its 400,000 workers and their many hundreds of thousands of dependants. Gazprom’s influence is so pervasive that kindergarten tots play with toy gas rigs, schoolchildren are instructed in exploration and production, and everyone wants to be a gazovik when they grow up.

“Even in the kindergarten we begin to teach children what we do in the gas industry,” said Nikolai Dubina, a Gazprom stalwart for more than 30 years, whose entire family appears to work for the company, including wife, son, daughter and their spouses. “I asked my seven-year-old grandson Nikolai what he wants to be when he grows up. He said: ‘Grandpa, I want your job’.”

Mr Dubina was among the pioneers who, in a typically devoted piece of Soviet heroism, ploughed through an Arctic December for six days in 1973 to colonise the vast empty space that is now the world’s second largest gasfield, sleeping in primitive caravans and working in temperatures as low as -60C. He doesn’t want the dynasty to unravel. But at the same time he knows the company has to modernise. And in so doing, Gazprom seems to be assessing which is its most important asset: its people or the stuff they drill out of the ground.

“People are our most important resource,” declared Vitaly Chuprin, noting that 70% of the city depends on the company. He paused, then added: “Apart from the gas, of course.”

http://business.guardian.co.uk/story/0,,1971538,00.html

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