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Last Updated: Friday, 24 June, 2005, 10:07 GMT 11:07 UK
Gazprom opens doors to foreigners
Gazprom headquarters in Moscow
Gazprom aims to be a cornerstone of the Russian stock market
Russian gas monopoly Gazprom has said it will be fully open to foreign investors by the end of the year.

Gazprom also said the government had bought an extra 10.7% its stock, giving it a majority stake in the firm.

That neutralises the threat of a takeover and lets Gazprom position itself as one of the biggest and most attractive emerging market stocks.

Gazprom, which controls one-fifth of the world's gas reserves, also said it planned to increase oil output.

'Process of liberalisation'

The complete lifting of trading restrictions is more than many observers had expected.

At present, foreign investment in Gazprom is capped at a maximum of 20%.

American depositary shares, which trade in New York and account for 3% of Gazprom stock, can be freely traded by foreign investors.

The announcements came at Gazprom's annual general meeting in Moscow.

The move comes after Gazprom became embroiled in the Yukos affair and abandoned plans to merge with oil firm Rosneft.

"It is expected that the process of liberalisation will be fully completed by the end of the year," said Dmitry Medvedev, chairman of Gazprom and Russian President Vladimir Putin's chief of staff.

He added that the Kremlin planned to finance the $7.12bn purchase of Gazprom shares by selling a minority holding in Rosneft.

Open door

We plan to cut our dependence on gas exports
Alexei Miller, CEO Gazprom

Mr Putin's administration had to rethink its plans to merge Gazprom with Rosneft after oil firm Yukos took legal action to prevent its break-up in a battle over unpaid taxes and fines.

The government had wanted to shift the key crude production unit of Yukos to Gazprom and then merge the newly enlarged oil and gas group with Rosneft.

Instead, to avoid legal action, it had to sell the division to Rosneft, which needed to borrow heavily to finance the deal.

Analysts also said that managers at both firms had strongly resisted the merger, forcing a major government rethink.

Oil plans

Gazprom said it was now considering a significant boost to its oil production, aiming to eventually achieve 50% of its earnings from crude.

"We plan to cut our dependence on gas exports," said chief executive Alexei Miller. "We are studying the possibility of new acquisitions in this sector in Russia and abroad."

Gazprom said it may use the money from the sale of the 10.7% stake to the state to finance purchases.

The firm also plans to strengthen its role in Russia's power sector and is looking at ways of swapping media assets such as NTV television and Ekho Moskvy radio.


SEE ALSO:
Kremlin agrees price for Gazprom
16 Jun 05 |  Business
Russia to buy control of Gazprom
17 May 05 |  Business
Russia moves on gas giant merger
14 Mar 05 |  Business
Managers' row hits Russian merger
03 Mar 05 |  Business
Ex-Yukos unit left out of merger
02 Mar 05 |  Business
Putin backs Gazprom shares deal
14 Sep 04 |  Business


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