Russia's Sberbank lays off analysts for negative Gazprom report

Russia’s Sberbank has carried out layoffs in the analysis division that presented a review of Gazprom in May which said that all of the company’s largest gas pipeline projects are detrimental and profitable only for the subcontractors, who are almost exclusively friends of President Vladimir Putin.

The author of the review, chief analyst for the oil and gas sector Alex Fek, was fired on May 22. The next day Alexander Kudrin, head of Sberbank CIB’s analysis division, left the company “by agreement between the parties”, Interfax reported. Sberbank CEO Herman Gref personally expressed dissatisfaction with the review. “The author effectively drew conclusions from unverified and unsupported information, thereby misinforming the market,” Gref said, adding that both internal regulations and ethical norms were violated by the review.

The scandalous review was distributed to Sberbank CIB’s clients last week. In it, the cost of Gazprom’s major construction projects Nord Stream 2, Turkish Stream and the Power of Siberia was estimated at $94 billion, or 6 trillion rubles.

Taking into account all of the accompanying expenses, Turkish Stream will cost $21 billion, will not pay itself off in the next 50 years, and will cause Gazprom a loss of $13 billion, Fek estimated. Nord Stream 2 will cost $17 billion, will not pay itself off for 20 years, and will lower Gazprom’s value by a further $6 billion.

The Power of Siberia, the analyst wrote, will cost $54 billion, and its net impact on Gazprom will be $11 billion due to the fact that the contract to supply China with gas was made when oil cost $100 per barrel, and the project became unprofitable following the crash in price.

“Gazprom’s decisions become completely understandable if we assume that the company is managed in the interests of its subcontractors, and not to make a commercial profit,” the report states.

Almost all of the subcontractors belong to billionaires close to the Kremlin. Nord Stream 2 will be constructed by Gennady Timchenko’s Stroytransgaz, which will also build the Power of Siberia alongside Arkady Rotenberg’s Stroygazmontazh.

“Whether this is recklessness or deliberate provocation, I cannot say. However, our standards of professionalism do not permit us to tolerate such unprofessional actions, and so Sberbank CIB has decided to let go of the author of the report and the persons who allowed the report to be published,” Sberbank CEO Gref remarked.

  Gazprom, Sberbank