  We analyse the distribution of matter around the progenitor star of gamma-ray
burst GRB 021004 as well as the properties of its host galaxy with
high-resolution echelle as well as near-infrared spectroscopy. Observations
were taken by the 8.2m Very Large Telescope with the Ultraviolet and Visual
Echelle spectrograph (UVES) and the Infrared Spectrometer And Array Camera
(ISAAC) between 10 and 14 hours after the onset of the event. We report the
first detection of emission lines from a GRB host galaxy in the near-infrared,
detecting H-alpha and the [O III] doublet. These allow an independent
measurement of the systemic redshift (z = 2.3304 +/- 0.0005) which is not
contaminated by absorption as the Ly-alpha line is, and the deduction of
properties of the host galaxy. From the visual echelle spectroscopy, we find
several absorption line groups spanning a range of about 3,000 km/s in velocity
relative to the redshift of the host galaxy. The absorption profiles are very
complex with both velocity-broadened components extending over several 100 km/s
and narrow lines with velocity widths of only 20 km/s. By analogy with QSO
absorption line studies, the relative velocities,widths, and degrees of
ionization of the lines ("line-locking", "ionization--velocity correlation")
show that the progenitor had both an extremely strong radiation field and
several distinct mass loss phases (winds). These results are consistent with
GRB progenitors being massive stars, such as Luminous Blue Variables (LBVs) or
Wolf--Rayet stars, providing a detailed picture of the spatial and velocity
structure of the GRB progenitor star at the time of explosion. The host galaxy
is a prolific star-forming galaxy with a SFR of about 40 solar masses per year.
