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Miller, Alexei 1962–

Alexei Miller
1962

Chairman of the Management Committee, Gazprom

Nationality: Russian.

Born: January 31, 1962, in Leningrad, Soviet Union.

Education: Leningrad Institute for Finance and Economics, BA, 1984; PhD, 1989.

Career: Leningrad Research Institute of Civil Construction, 19841986, engineer-economist; Leningrad Finance and Economic Institute, 1990, researcher; St. Petersburg Mayor's Office, Foreign Economic Relations directorate, 19911996, head of markets monitoring department; St. Petersburg Seaport, 19961999, director; Baltic Pipeline System Company, 19992000, general director; Russian Federation, 2000, Deputy Energy Minister; Gazprom, 2001, chairman of the management committee.

Awards: Merits before Fatherland Award of II degree, Russia; Award of Sergiy Radonezhskiy of II degree of the Russian Orthodox Church; Patriarch Honorable Award, Russia.

Address: Gazprom, 16 UI. Nametkina, Moscow 117884, Russia; http://www.gazprom.ru/eng.

Alexei Miller became the chairman of the Gazprom management committee in 2001 after the board of directors removed Rem Vyakhirev. Under Vyakhirev Gazprom was mismanaged, turning into a gas giant that was struggling both financially and internally; Miller was chosen to transform Gazprom back into a successful company again. Bearing a doctorate in economics, he took a more technical view of company finances and made difficult and controversial desicions. His significant changes in Gazprom's management brought profits and company unity in only three years.

EDUCATION AND EARLY CAREER

Miller was born on January 31, 1962, in Leningrad. He graduated from high school in 1979 and attended the Leningrad

Finance and Economics Institute, where he studied economics. He earned his degree in 1984 and went on to work as an engineer-economist in the general planning division of the Leningrad Research Institute of Civil Construction. He went back to school at the Finance and Economics Institute in 1986, earning his PhD in economics in 1989. He worked for a variety of organizations before President Vladimir Putin appointed him as chairman of Gazprom with responsibility for turning the company around. He had been the director of development and investments at the St. Petersburg Seaport, the largest seaport in northwestern Russia, and later the general director of the Baltic Pipeline System Company. In 2001 he became Gazprom's management committee chairman. Miller's appointment was surrounded by much controversy, as he had many opponents, but he met with substantial success through hard work and determination.

GAZPROM

After taking over as chairman of Gazprom, Miller achieved early victories in gaining firm control of the Russian gas giant. Many interest groups, old Gazprom managers, and other oil companies had been especially displeased with Miller's appointment; they did not want to see a strong leader at the helm because they wished to take advantage of the company, which had been in chaos. Allegations surfaced that managers had been stealing from the company and that many of Gazprom's business deals had not been in its own favor. Miller made rapid progress in asserting his authority when he forced the board to buy back Purgaz, the gas-producing subsidiary of which Gazprom had lost control in 1999. Miller's goal was simple: to recover Gazprom's lost assets.

While his goals were straightforward and clearly good for the company, many still did not want Miller to succeed. In fact rumors about him were spread around, including allegations that he had been fired after only five months on the job. Other oil companies especially wanted Gazprom to remain in disarray so that they could attain cheap assets. Sabrina Tavernise wrote in the New York Times, "Miller took the helm at Gazprom after years of mismanagement and lack of investment had driven the company into decline" (December 19, 2001). Miller needed to create a coherent plan for turning Gazprom back into the gas giant it had been in the past.

FOCUSES ON IMMEDIATE PROBLEMS, NOT RESTRUCTURING

Miller decided that the company's problems would be solved in focusing on three areas in particular: he would reacquire gas assets lost in previous years, reversing Gazprom's declining gas output; he would ensure that no employees were stealing from the company; and he would "concentrate on consolidating government control over Gazprom by replacing people associated with ex-CEO Rem Vyakhirev with executives loyal to Putin" (January 31, 2002). Miller did not immediately conceive a precise reorganization plan for the company, however, because he did not feel it to be necessary.

In June 2002 Miller attended Gazprom's annual shareholders' meeting as one of six state representatives, at which meeting he related some of his successes. He had been able to rein in theft by top managers and had recovered production assets that had been sold to controversial gas traders.

CONTINUES TO RESHAPE GAZPROM

Miller thought it necessary to reachieve financial stability at Gazprom before increasing capitalization. The deputy chairman and financial chief Vitaly Savelyev left the company in 2002 because he had been unable to reduce short-term debt. Miller replaced him with Boris Yurlov, who he believed would introduce a more conservative plan for financial recovery. Miller took criticism for the appointment; an FSU Energy article suggested, "Former Gazprom chairman and Russian prime minister Viktor Chernomyrdindeemed by many to be the godfather of the asset-stripping schemes at Gazprom before Miller's arrivalis trying to persuade the presidential administration that Miller should be removed" (May 31, 2002). Miller worked through such rumors, reshaping the company's board by replacing members who bore allegiance to the former chairman.

By 2003 Miller had made sizable progress at Gazprom, having devised a long-term strategy that would be implemented over a period of 25 years. He centered his plan around the development of five core production areas. As stated in an article in Gas Connections, he moved toward "improving tax and pricing policies, setting up a favorable investment climate, and creating a competitive domestic market" (June 12, 2003). His plan relied on the European market, which he stated would continue to be a priority for Gazprom. Miller also wanted to expand into the Asia Pacific region when the company had gained sufficient strength.

Gazprom had bought back many of its lost assets, and the company was slowly moving toward financial stability. Yet not everyone appreciated Miller's hard work and difficult decisions, arguing that he was paying excessive prices to buy back assets that had been lost under the previous management.

GAZPROM BEGINS TO GROW

Under Miller's guidance Gazprom reached financial stability in only three years. The company met its gas production goals for 2003 and moved from a state of restabilization to one of growth. Net profits were expected to exceed RUR 200 billion in 2003. Miller worked concertedly during his tenure to bring together a team of like-minded professionals who would work their hardest to pull Gazprom out of debt and chaos. He established a new corporate spirit, wherein employees persevered and cooperated in order to achieve common goals. Miller chose his employees with care and treated them with respect. In bringing Gazprom out of its crisis, he gave much of the credit to his dedicated employees.

LOOKED TOWARD EXPANSION

While he stated that Europe would be Gazprom's major export market, Miller looked for additional channels through which to spur the company's growth. He hoped to expand into Asia Pacific and studied the markets in China, Japan, and Korea, where Gazprom might increase both production and profits. The company planned to diversify its services to include offerings of electricity and liquefied natural gas; Miller even hoped to gain access to the liquefied gas market in the United States, for which Gazprom was still in the preinvestment study phase by mid-2004. Miller also looked to raise gas prices in Russia as part of his long-term growth strategy. He did not plan on breaking Gazprom apart into smaller companies, nor did he agree with the idea of privatization. Gazprom had been created as a large, public company and would stay that way under Miller's leadership.

MANAGEMENT STYLE

Miller had an assertive management style and was able to overcome many obstacles when he became Gazprom's chairman. He nurtured a new office climate, in which employees were loyal to both him and the company. He fired top employees who lacked such loyalty, sending a message throughout the company's ranks. Gazprom's staff became comprehensively supportive and filled with professionals who all wished to better their company.

During his leadership at Gazprom, Miller dealt with criticism from many individuals; his tactics proved successful in the end. He bought back many of the assets Gazprom had lost during its years of mismanagement, increasing gas production.

After three years Gazprom had reached the point where it was making a profit and looking toward new ways to expand.

See also entry on OAO Gazprom in International Directory of Company Histories.

sources for further information

"Gazprom Finance Chief Resigns," FSU Energy, May 31, 2002, p. 11.

"Gazprom Replaces CEO, Improves Prospects for Eurobond," Euroweek, June 1, 2001, p. 14.

"Miller Bullish on Russian Gas," Gas Connections, June 12, 2003, p. 9.

"Miller Rules Out Gazprom Reform," NEFTE Compass, January 31, 2002, p. 3.

Tavernise, Sabrina, "Did Russia's Gas Giant Just Glimpse the Future?" New York Times, December 19, 2001.

Deborah Kondek

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