The latest threat to embattled gas giant Gazprom isn’t shale—it’s wood pellets
The outlook for Gazprom, the Russian natural gas giant whose aggressive practices have intimidated neighbors for years, just hit a new low. In response to the global gas glut, the company has caved to lower price demands by small countries that it once threatened with a shutoff of winter heat, such as Lithuania and Bulgaria. Russian president Vladimir Putin, the company’s main patron, has turned his back on the company, allowing foreign producers to cut deals that challenge Gazprom’s powerful monopoly on Russia gas exports. And now, Gazprom is facing yet another indignity: the threat of wood pellets.
In a letter published on June 24 in the Financial Times, Gazprom’s deputy CEO Alexander Medvedev counters a June 5 article in the paper titled, A Cap on Gazprom’s Ambitions, which describes the various ignominies confronting the company since the US shale gas boom. Medvedev argues that portraying Gazprom as weak is a “fashionable” illusion. Why? Because the company is highly profitable, he says, and contrary to popular belief, its gas is not overpriced. Gazprom consciously prices its gas to compete fairly by weighing the costs of comparable fuel alternatives for heat and electricity, he writes.
“If you have meaningful access to an energy source,” Medvedev writes, “we will make sure to price it in [to the Gazprom rate], because it is in our interest to keep gas competitive.” Among those energy sources, he says, are “coal or even wood pellets.”
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http://qz.com/97581