Atomstroiexport prez appointed Energy Minister by PM Putin, showing Russia means nuclear business

Publish date: May 13, 2008

Written by: Charles Digges

Former President Vladimir Putin In one of his first acts as Russia’s new prime minister – a job that he is expected to turn into the country’s true seat of power - appointed as his new energy minister Sergei Shmatko, head of the state run worldwide nuclear reactor building firm Atomstroiexport.

Shmatko , 42, has no experience in oil or gas, the two biggest money-spinning pillars in Russia’s energy portfolio. Russia is the world’s largest natural gas producer and second largest oil exporter.

But Shmatko was president of Atomstroiexport, while it was overseeing construction of the $1 billion Bushehr reactor in Iran, setting of international controversy. And he was responsible for a successful bid to build a reactor in Bulgaria since he became Atomstroiexport’s president in June 2005.

Some analysts say that Shmatko’s lack of experience and exclusively nuclear background makes the appointment something of a surprise, news agencies reported.

Shmatko appointment could put nuke power centre stage

But Anton Khlopkov, executive director of the PIR think tank, told The Moscow Times that the appointment is a strong indication that Russia is seeking in earnest to become a major nuclear player on the international market.

Under Shmatko as energy minister, "nuclear energy will have more attention than before," said Khlopkov.

Russia wants to build 26 new reactors by 2030 under a plan developed by Sergei Kiriyenko, chief of the state nuclear corporation Rosatom.

Shmatko’s appointment also comes less than a week after the outgoing Putin government approved a wide-ranging civilian nuclear cooperation deal with the United States, which includes the construction of an international uranium fuel bank in Angarsk, near Irkutsk, and accepting hundreds of tons of US controlled spent nuclear fuel, as well as reactor technology sharing.

The Energy Ministry was hewn off the Industry and Energy Ministry as part of Putin’s proposals for his Cabinet. Former Industry and Energy Minister Viktor Khristenko will head the new Industry and Trade Ministry, whose priorities will include developing such high-tech sectors as electronics, shipbuilding and aviation, a statement from the ministry said Monday.

Aside from entrusting Shmatko to implement oil and gas policy, the post of energy minister will also make Shmatko one of the key regulators of the electricity sector, which is in the process of implementing free-market reforms.

Who will watch the oil and gas?

PIR’s Khlopov said that, as part of Russia’s emerging class of managers, the switch from nuclear salesmanship to presiding over the gas, oil and electricity sectors should be smooth.

"A class of professional managers has emerged in Russia," Khlopkov said. He recalled that Kiriyenko made the transition in the other direction from overseeing oil and gas in the 1990s as fuel and energy minister to his current position at Rosatom.

But Konstantin Simonov, director of the National Energy Security Fund, speculated that Deputy Prime Minister and Rosneft board Chairman Igor Sechin would assume power over the oil and gas sector.

Rosneft, Russia’s top oil producer, rose to prominence when the government granted it most of the assets of bankrupted Yukos, after Yukos’ director Mikhail Khodorkovksy was jailed on tax evasion charges that emerged after the popular young businessman expressed political opposition to the Putin administration.

"It’s clear that, despite expectations, the Energy Ministry will not closely watch oil and gas," Simonov told The Moscow Times. "Sechin will do it all."

Russian oil and gas companies had no reaction to Shmatko’s appointment Monday afternoon. "We don’t comment on such things," said Dmitry Dolgov, a spokesman for LUKoil, the country’s largest privately controlled oil firm.

Shmatko from nuke subs to Germany
Shmatko first came into contact with nuclear technology when he was conscripted to serve on nuclear-powered submarines in the Northern Fleet from 1985 to 1988.

After the Navy stint, Shmatko majored in economics at universities in Yekaterinburg and Marburg, Germany. He was a student in Germany at the time when the Soviet Union collapsed.

After studying and working in Germany, Shmatko moved to Russia as head of external relations at the All-Russia Bank for Regional Development in 1995. Two years later, he became an analyst at the Federal Nuclear Power Agency and has remained linked with the industry since then.