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Last Updated: Tuesday, 14 September, 2004, 16:43 GMT 17:43 UK
Putin backs Gazprom shares deal
Russian President Vladimir Putin
President Putin is backing a liberalisation of Gazprom ownership
Russian president Vladimir Putin has backed a shake-up at energy giant Gazprom which would end a bar on the foreign ownership of the firm's shares.

He is supporting proposals for the state to take a majority stake in the world's biggest gas producer through a merger with state oil firm Rosneft.

State control has been a precondition for the government to permit foreign ownership of domestic Gazprom stock.

Gazprom produced about one fifth of the world's gas output in 2003.

The company also owns 60% of the world's known gas reserves, making it an enticing prospect for overseas investors.

'Effective control'

The Russian government currently owns 38% of Gazprom shares, while the firm itself owns another 17% of its own stock.

Domestic Russian Gazprom stock trades at a one-third discount to the company's London-listed American Depositary Shares.

"I am convinced that the dual system (of share ownership) should be ended as quickly as possible. The sooner it is done...the better," President Putin said in a televised meeting with Russia's Prime Minister, Mikhail Fradkov.

"These are proposals linked to the need to establish conditions for the liberalisation of Gazprom shares and to maintain effective state control over this industry and this major global company," Mr Fradkov said.

President Putin's comments were welcomed by investors, with domestic Gazprom shares closing up 15%, at 67.73 roubles ($2.31), on Moscow's RTS exchange.

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