It is not easy being a Russian company trying to expand into the UK, as Gazprom is discovering.
Turning over £15bn-plus of global sales, making it the largest company in its homeland, and exporting more natural gas than any single country is all well and good, but the pesky Brits tend not to trust a company that is 38 per cent owned by the Russian state.
Intrigue, scandal and suspicion surrounds the firm, hampering attempts to portray itself as a straightforward industrial giant, and potentially working against any subsequent bid for British Gas, which it has been rumoured to be considering for some time.
‘Maybe it’s a Cold War thing, maybe it’s a cultural thing,’ admits Gazprom Marketing and Trading UK head of PR Philip Dewhurst. ‘But Gazprom is aware there is a challenge and is actively doing something about it.’
This activity has been motivated primarily by Gazprom’s desire to pick up corporate business. The company started its move into the UK last year when it bought Pennine Natural Gas, turning it into Gazprom Marketing and Trading.
Gazprom recently picked up some contracts and now supplies power to York Minster, Headingly cricket ground and London’s third largest building – CityPoint Tower.
The firm supplies more than a quarter of the gas needs of Italy, France and Germany – also countries that have a history of anti-Russian sentiment. But this is in part due to canny marketing. Gazprom sponsors FC Schalke 04, one of Germany’s top football sides.
Such campaigns to raise awareness of foreign names have worked in the past – it is why German power company E.ON is currently sponsoring the FA Cup – and Gazprom is trying the same strategy over here, but with more PR focus.
‘The more people get to know Gazprom the more comfortable they feel with the brand,’ argues Dewhurst. ‘It’s not rocket science: we have to prepare the Gazprom story, and then tell it.’
Which is why Gazprom graced the front page of The Guardian last Thursday and two recent BBC articles aired on its website highlighting the progress the company has made in Europe. In each case a journalist was invited to see Gazprom in action.
But its links to the Russian government are hard to gloss over. One national newspaper City journalist claims that until Gazprom is freed from its association with political disputes, such as those with Ukraine and Belarus, it will suffer. And events such as the death of Alexander Litvinenko, whether it is linked to Putin’s government or not, have a negative impact on the international standing of Russian businesses as a whole.
‘How safe is shareholder investment and how free is the company from the Kremlin dictating its actions?’ asks Evening Standard City commentator Anthony Hilton. ‘People are naturally nervous about Gazprom, because some of its activities are not transparent.’
Dewhurst argues that the firm’s 100 UK-based staff are not aware, on a day-to-day basis, of any Kremlin activity impinging on the business. He also points to Exxon-Mobil’s links with US president George Bush, and the fact that it still operates successfully.
But he accepts that the company’s origins can be detrimental. ‘Press negativity does happen and it’s up to us to change it as much as we can.’
One national broadsheet business journalist suggests the best way to achieve change is simply meeting journalists and being as friendly as possible.
A City PRO says Gazprom is failing to help itself even when it is in a position to do so. ‘When Gazprom raised charges in the Ukraine last year, all it was doing was bringing pricing up to a competitive level [the Ukraine subsequently had its gas supplies cut]. It was an entirely commercial decision,’ he says. ‘But the company failed to realise that they could get crucified because people would think it was politically motivated. There was no comms strategy to deal with it.’
As many City PROs will testify, part of the problem is the unfamiliar way in which Russians tend to operate. An American businessman will treat you as if he is your friend; Russian businessmen will only ask ‘how have you been?’ if they genuinely want to know, they say.
Gazprom’s reserved Russian nature has served it well in Moscow, where people prefer their businesses to be slightly publicity shy. Here in the UK, however, the thirst for information and regulatory requirements are much greater.
‘Many people don’t really understand Russia and Russian culture. It has relatively few tourists but as they increase, so will the understanding,’ says the City PRO.
Gazprom’s history has also left it rather short on comms staff. It has only three senior comms professionals despite the fact it operates in 40 countries. ‘I want Gazprom to be respected as much as its customers,’ says Dewhurst.
Gazprom has done some work with Hill & Knowlton and is mulling over hiring the agency. And rumours this week suggest the Russian Embassy is looking to roll out a PR campaign promoting Russian businesses in the UK, from which Gazprom will benefit.
But whatever progress Gazprom makes, it will still lose trust every time a big story concerning the action of the Kremlin makes the headlines.
‘No-one believes Gazprom isn’t a tool of the Russian state,’ says Hilton. ‘And until that changes, Gazprom’s problems are much more than a PR issue.’
‘The more people get to know Gazprom the more comfortable they feel with the brand. We have to prepare the Gazprom story – and then tell it’ - Philip Dewhurst, head of PR, Gazprom Marketing and Trading