The Empire Strikes Back: European Energy and the Return of Gazprom

Abstract

Gazprom, like its Russian state owners, has pursued an effective, long term strategy of ingratiating and integrating its interests with those of its downstream customers. It may have struck a coup though in moving closer to RWE Germany's second largest electricity producer. The field of maneuver for a Gazprom ownership stake in RWE has been made perceptively easier with the Merkel government's decision to discontinue nuclear power as an entire class of power generating technology available to German industrial and residential consumers. As a partial result of this decision, RWE has lost a reported 20% of its market value and is eager for the new investment that Gazprom can provide. Vertically integrating Gazprom as a key player in Europe's largest industrial economy is really what is at stake in the short term. Integrating Russian influence as a base-load factor in Germany's future is of longer term concern.