BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Thursday, 6 September, 2001, 15:30 GMT 16:30 UK
Kremlin lifts Gazprom secrecy veil
The Russian state is determined to tighten its control over Gazprom
Gazprom: Russia's most powerful company
Russian President Vladimir Putin has approved a plan to liberalise trading in shares of Gazprom, the world's biggest gas company.

The move should help introduce more transparency and hasten reforms at Gazprom which, while profitable, has prompted concerns over the levels of secrecy surrounding its operations.

Mr Putin declined, however, to lift the current ceiling of 20% foreign ownership at the firm, in which the Russian state has a 38% share.

We will open the door wider for foreign investors

Dmitry Medvedev, presidential deputy chief of staff

"[Russian leaders] advocate a cautious approach and believe that a reasonable conservatism is necessary to carry out the reform in a reasonable time and with the best economic result," said Dmitry Medvedev, first deputy chief of the presidential staff, who is in charge of the reform.

Eventually, the liberalisation may result in foreigners being granted equal rights with Russians in trading Gazprom shares - something that could happen as early as the beginning of next year.

Unfair shares

Gazprom's shares are currently only available to international investors in the form of American Depositary Receipts, a mechanism to repackage foreign shares for the US markets.

Russian president Vladimir Putin
The Kremlin has tightened its grip on the company

Officially, foreign investors own just over 14% of the firm's shares, but others are believed to have bought stakes via Russian proxies.

Mr Medvedev said the government did not plan a witch-hunt of clandestine foreign investors.

"We want Gazprom's capitalisation to increase and, as it grows, we will open the door wider for foreign investors," he said.

The Kremlin recently tightened its control over Gazprom, after winning a majority of seats on the firm's board at its annual general meeting.

Gazprom, which produces one-quarter of the world's gas, is vital to the Russian economy, accounting for 8% of gross domestic product and one-fifth of its tax revenues.

Poor performer

It is unlikely that the reform will have much immediate effect on Gazprom's share price, which has long been a lacklustre performer.

Few analysts are delighted by the Putin plan, since there had been hopes of a more specific and aggressive government shake-up at the firm.

Gazprom's control centre in Moscow
Gazprom accounts for one-quarter of the world's gas

Details - especially on timing - are still maddeningly vague.

Investors have long been concerned that the firm is not frank and open enough to make a safe investment.

Gazprom has tended to resist outside attempts to clear up questions about its finances and relationships to other companies.

The most troublesome case has arisen from persistent allegations that Gazprom had a clandestine relationship with Itera, a little-known US-based firm which became a major gas supplier to the ex-Soviet markets that Gazprom controls.

See also:

29 Jun 01 | Business
Kremlin grabs control at Gazprom
30 May 01 | Business
Europe's need for Gazprom's gas
30 May 01 | Business
Gazprom boss fired
25 May 01 | Business
Gazprom management under pressure
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories