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Newsweek: We’re No ‘Monster’: A Kremlin insider defends Russia’s powerful energy giant—and its controversial policies.

Jan. 29, 2007 issue – Alexander Medvedev is deputy chairman of Gazprom, the huge company at the heart of Russia’s emerging energy empire. Last week he announced that profits rose 43 percent in 2006 to $37.2 billion, even as European leaders were voicing open concern about Russia’s use of oil and gas shipments to pressure small neighbors like Belarus and Ukraine.

Medvedev is among the Gazprom execs preparing to travel to Davos, where “power shifts” to new players like Russia lead the agenda. They’ll try to present Russia as a reliable partner and head off European moves to diversify.

Medvedev spoke to NEWSWEEK’s Owen Matthews in Moscow:

Matthews: How badly have oil and gas cutoffs to Belarus and Ukraine damaged Russia’s reputation?
Medvedev: There’s a Latin saying: “Through difficulties, we reach the stars.” Our actions were misunderstood, especially by the press. But in fact all our actions have actually been aimed at reducing long-term risk to gas supplies by normalizing relations with transit countries. Those transit countries were used to living on someone else’s account. Now we are shifting all our relations with customers to a market basis. We have signed new long-term contracts, not just for a couple of winters, but until 2025 and 2030. There will be no more crises.

German Chancellor Angela Merkel spoke of “a loss of trust” in Russia.
The question of energy cooperation has been needlessly politicized. If you take the long view, you see that we have been a supplier of gas to Europe for over 30 years, and there hasn’t been a single occasion when we didn’t fulfill our contractual obligations. Even during the [2006 cutoff of gas to] Ukraine, we continued supplying gas to European customers—the problems came from the transit country, not from us.

Why, then, is suspicion of Russia so deep?
Gazprom has become one of the world’s leading companies in the energy sphere—and not everyone likes that. Some have painted Gazprom as a monster. But in truth, we are as dependent on European customers as they are on us. Two thirds of our sales are to Europe, and most of our investment programs are also aimed at European consumers.

Yet Dick Cheney accuses Russia of using energy as a weapon.
I categorically deny that. The Russian state may be our largest shareholder, but we are a commercial company. We act according to universally accepted principles of corporate governance—to make money, and increase the value and share price of the company.

Some Europeans fear Gazprom will sell gas to China instead of Europe.
We have a situation where demand for imported gas in Europe is set to rise as European reserves fall. Yet at the same time we hear that Europe wants to reduce its dependency on Russia. The Europeans believe they will source gas from elsewhere, apparently. Fine, but we have to know if Europe is planning to do that or not, since we are talking of billions of dollars in investments in new pipelines—for instance, one under the Baltic Sea. If Europe is ready to buy more gas, we are ready to sell more. But if not, we have other customers—for instance, China.

Do you see potential for conflict between the United States and Russia over the energy resources of Central Asia?
We see the U.S. taking a strong interest in the region. Sometimes they don’t play entirely by the rules. For instance, we had talks last year with Turkey and Greece to send gas to Europe through the Southern Corridor [via the Bluestream pipeline under the Black Sea]. We reached agreements. But then Condoleezza Rice came to Greece and talked of Russia as an unreliable supplier. We were surprised. At the same time, we prefer to think of the U.S. are our partners. We hope that the U.S. will be a major buyer of our liquefied natural gas. And we have invited Chevron to join us in exploration in Western Siberia.

Do you think that the United States wants to undermine Russia?
It’s an argument which dates back to Soviet times—is it better for the world to have a weaker or a stronger Russia? In general, the consensus was that it was better to weaken the Soviet Union, and that was perhaps right, given its totalitarian tendencies. But you can’t take the same line with Russia. A strong Russia is a guarantor of security, not just of energy supplies. A strong, democratic Russia is good for the world. But I’m afraid that old concepts still hold sway among many in the West.

Were government complaints of environmental violations against Royal Dutch Shell a way to force the company to sell the majority of its Sakhalin-2 field to Gazprom? One Western paper described the sale as a “state-sponsored mugging.”

I am from Sakhalin myself, so I am very sensitive about any environmental violations there. Our buyout of Sakhalin-2 was done on a purely market basis. California, for instance, has extremely strict environmental demands of any oil company—but no one accuses the governor of California of “mugging” the oil companies. He is just protecting the economic and environmental interests of his people—as we are.

© 2007 Newsweek, Inc. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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