By ANDREW E.KRAMER


MOSCOW - A year ago, Gazprom, the Russian natural gas monopoly, aspired to be the largest corporation in the world. Buoyed by high oil prices and political backing from the Kremlin, it had already achieved third place judging by market capitalization, behind Exxon Mobil and General Electric.

Today, Gazprom is deep in debt and negotiating a government bailout. Its market capitalization, the total value of all the company’s shares, has fallen 76 percent since the beginning of 2008. Instead of becoming the world’s largest company, it has tumbled to 35th place.

That Russia’s largest state-run energy company needs a bailout so soon after oil hit record highs last summer is telling. Once the emblem of the pride and the menace of a resurgent Russia, Gazprom has become a symbol of this oil state’s rapid economic decline.

During the boom times, Gazprom and the other Russian state energy company, Rosneft, became vehicles for carrying out incremental renationalization.

As oil prices rose, so did their stocks. But rather than investing sufficiently in drilling and exploration, Russia’s president at the time, Vladimir V.Putin, used them to pursue his agenda of regaining public control over the oil fields, and much of private industry beyond.

As a result, by the time the downturn came, they entered the credit crisis deeply in debt and with a backlog of capital investment needs.

“They were as inebriated with their success as much as some of their investors were,”James R.Fenkner, the chief strategist at Red Star, a Russian-dedicated hedge fund, said of Gazprom’s ambition to become the world’s largest company.

After five years of record prices for natural gas, Gazprom is $49.
5 billion in debt. By comparison, the entire combined public and private sector debt coming due for India, China and Brazil in 2009 totals $56 billion, according to an estimate by Commerzbank.

Mr.Putin used Gazprom to acquire private property. In 2005 it bought the Sibneft oil company from Roman A.Abramovich, the tycoon and owner of the Chelsea soccer club in London, for $13 billion. In 2006 it bought half of Shell’s Sakhalin II oil and gas development for $7 billion. And in 2007, it spent more billions to acquire parts of Yukos, the private oil company bankrupted in a politically tinged fraud and tax evasion case.

A deputy chief executive of Gazprom, Aleksandr I.Medvedev, predicted the company would achieve a market capitalization of $1 trillion by 2014. Instead, its share price has fallen 76 percent since the beginning of 2008 and its market cap is now about $85 billion.

Gazprom is far from broke. The company made a profit of 360 billion rubles, or $14 billion, from revenue of 1,774 billion rubles, or $70 billion, in 2007, the most recent audited results released by the company.

Gazprom executives say they are reviewing spending but will not cut major developments, including two undersea pipelines intended to reduce the company’s reliance on Ukraine as a transit country for about 80 percent of exports to Europe.

“All our major projects in our core business - upstream, midstream and downstream - will continue with very simple efforts to meet demand both in Russia and in our export markets,”Mr.Medvedev said.

But revenue is projected to fall steeply this year. Gazprom received an average of $420 per 1,000 cubic meters for gas sold in Western Europe this year; that is projected to fall to $260 to $300 in 2009.

For a time, Gazprom, a company that evolved from the former Soviet ministry of gas, had been embraced by investors as the model for energy investing at a time of resource nationalism, when governments in oil-rich regions were shutting out the Western majors.

But with 436,000 employees, extensive subsidiaries in everything from farming to hotels, higher-than-average salaries and company-sponsored housing and resorts on the Black Sea, critics say Gazprom perpetuated the Soviet paternalistic economy well into the capitalist era.

“I can describe the Russian economy as water in a sieve,”Yulia L.Latynina, a commentator on Echo of Moscow radio, said of the chronic waste in Russian industry.

“Everybody was thinking Russia had succeeded, and they were wondering, how do you keep water in a sieve?”Ms.Latynina said.“When the input of water is greater than the output, the sieve is full. Everybody was thinking it was a miracle. The sieve is full! But when there is a drop in the water supply, the sieve is again empty very quickly.”