Streamlining OAO Gazprom intra-corporate governance structure
Over several years Gazprom has been conducting an internal reform aimed at enhancing the Company’s operating efficiency. The main challenges of Stage One reforms are met. Gazprom has improved its governance structure, increased the regulatory procedure mobility and introduced budgeting systems.
Stage Two reforms are targeted at boosting operating efficiency of Gazprom as a vertically integrated company active throughout the entire gas chain including exploration, production, transmission, processing, storage and marketing. A critical task is to optimize the core business management structure at the subsidiary level.
Streamlining the intra-corporate governance structure contemplates concentrating separate core businesses within specialized wholly owned subsidiaries of Gazprom.
The structural changes will result in gas exploration, production, transmission, processing, underground storage, marketing and liquid hydrocarbon businesses being legally unbundled. The move will enable the Company to increase cost transparency in the gas production, transmission and marketing sectors.
On March 29, 2006, the Gazprom Board of Directors approved proposals on the reorganization of the subsidiaries where Gazprom is the only stockholder. The reorganization process will result in the foundation of the Gazprom wholly owned subsidiaries (specialized core business companies): Gazprom-UGS, Gazprompererabotka, Gazprompodzemremont-North, Gazprompodzemremont-South, Gazpromtransgaz-Kuban. In addition, Gazprom will become a 100 per cent stockholder in Gazpromtransgaz.
In accordance with the Board of Directors’ resolution, Gazprom launches the main stage of structural changes. The reform implementation scheme contemplates reorganizing 17 subsidiaries and includes two stages:
The above organizational and legal scheme gives the opportunity to ensure clear and prompt managerial decision-making and is in line with existing international practices.
In future, there are plans to create legal entities consolidating other types of services (for example, customer service, fuelling stations etc.).
Streamlining the Gazprom intra-corporate governance structure is a crucial element of the Company’s activity aimed at transforming Gazprom into a global vertically integrated company holding leading positions in the world energy market.