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Gazprom: rising star of new Kremlin capitalism

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A golden skyscraper, soon to thrust 1,300 feet above the crumbling riverside palaces of Russia's ancient czarist capital, St. Petersburg, will announce the rapid emergence of a powerful new Russian company that's acting boldly, growing fast, moving West, and changing whatever it touches: Gazprom.

As Russia's No. 1 firm, the energy giant can certainly afford to house its new petroleum wing, Gazprom-Neft, in such extravagance. In the first nine months of last year, Gazprom's net profits leapt 80 percent. Roaring past industry behemoths Shell and BP last year, the state-owned natural gas monopoly is now the world's second-largest energy company after Exxon-Mobil.

But critics say the conglomerate, which owns a bank, soccer team, and media wing, is much more than the successful new kid on the global energy block. They describe the company as the Kremlin's flagship – and chief battering ram – in a strategy to restore state control of Russia's booming but petroleum-dependent economy, and use that accumulated power to further Moscow's agenda at home and abroad.

Worries over Gazprom's growing political role were boosted this month when, for the second time in just over a year, energy supplies to Europe were cut off amid a pricing dispute between Russia and one of its post-Soviet neighbors.

Since 2004, state control of Russia's oil industry has jumped from around 7 percent to over 35 percent, and is set to grow further this year, experts say. Gazprom and the state oil company Rosneft, headed by Kremlin-appointed officials, have been the key agents in takeovers of private oil companies such as Yukos, Sibneft, and, late last year, the Shell-run Sakhalin-2 project on Russia's Pacific coast.

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