(UPDATE) Gazprom to Spend $11 Million on an Image Makeover

[UPDATE] Both the Financial Times and the Moscow Times have weighed in on the story broken by Kommersant. The FT writes “Both Gazprom and the Kremlin have struggled to get across their message that price rises for former Soviet republics are part of a commercial move away from longstanding subsidies and towards market prices, rather than being politically motivated.” The Moscow Times reports that Gazprom has hired Phillip Dewhurst, formerly of British Nuclear Fuels. MT reports: “I think the way to do that is just to tell people that Gazprom has a very good record of working with the U.K.,” he said. “For example, Gazprom has supplied gas to the U.K. for 25 years and it’s been a very reliable and secure supplier. That’s the message we have to spell out.” Today Kommersant is reporting that Gazprom is preparing an $11 million public relations budget to overhaul their image following the significant damage and loss of trust caused by the gas wars. Although it would seem that we are talking about something that cannot be bought, brace yourselves for some serious spin in 2007. (thanks to reader Alex for the lead). Kommersant:

Gazprom to Launch Major PR Campaign Since a series of “gas wars” with CIS countries undermined Western consumers’ confidence in Gazprom, the Russian monopoly has been concerned with improving its image abroad. Kommersant has learned that OOO Gazprom Export is negotiating with a consortium of PR firms headed by the PBN Company on a three-year contract for a series of campaigns in the United States and European Union. Gazprom is prepared to pay $11 million in 2007 for those services. According to information obtained by Kommersant, the Gazprom campaign will be part of a larger campaign by Russian authorities to improve their image in the West. … The main task of PBN and its colleagues in the U.S. and UK will be to develop a program to improve Gazprom’s image abroad, mainly in the U.S. and EU. A source says that Gazprom Export wants to concentrate on its positioning as a commercial structure. “In the West, Gazprom is closely associated with the name of Russian President Vladimir Putin and his political circle,” the source explained. “The company wants to position itself differently.” Gazprom needs a PR campaign now more than ever before. The oil and gas conflict with Belarus has damaged the reputation of Gazprom more than Transneft. Russia’s problems as a dependable energy supplier affect gas market, which is not very competitive, and not the competitive oil market. German Chancellor Angela Merkel spoke last week about a “loss of confidence” in Gazprom.