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Russian Ban On Foreign Ownership In Gazprom Is Being Lifted.

Russia's State Duma - lower house of parliament - on Dec. 9 voted to lift a ban on foreign ownership of Gazprom's shares, bringing the gas monopoly one step closer to becoming the world's number-one emerging market stock. In a vote, 335 deputies backed proposed amendments to the Law on Gas Supply and 80 voted against. The upper house of parliament is expected to approve the Gazprom amendments on Dec. 14 and President Putin is to sign it into law soon afterwards, making a year-end deadline feasible.

The long-awaited share liberalisation is a boon for Gazprom equity holders since it is expected to trigger billions of US dollars of new investment flows into its shares. It will transform Gazprom into the heaviest-weighted stock in the benchmark Morgan Stanley Capital International global emerging market index, which is tracked by global investors with $3 trillion in assets, from near zero now.

That will make Gazprom, Russia's largest company by market capitalisation and the world's largest gas producer, a must-hold stock for many institutional investors. It will close the discount between its local shares and the small free float of American Depositary Shares (ADS) traded in London. Foreign investment are needed to finance massive capacity expansions at Gazprom, which has recently become a major oil producer as well.

In addition to the amendments on the Law on Gas Supply, the government must implement steps to legalise holdings bought by foreigners before 1997.

Gazprom In Talks With TNK-BP Over Sakhalin Licence: Gazprom is in the final stages of talks over the purchase of an exploration licence on Russia's Sakhalin Island from Anglo-Russian oil producer TNK-BP, a TNK-BP spokeswoman said last week. But the purchase of the Lopukhov block licence has not yet been completed.

Marina Dracheva, spokeswoman for TNK-BP, said: "We are indeed in talks with Gazprom over finalising their acquisition of the Lopukhov block. The sale process is not over yet. We're not offering any further comment on the terms of the deal".

Gazprom has already declared its interest in Sakhalin, a region rich in oil and gas off Russia's Pacific coast. A spokesman for Sibirskaya Neftyanaya Kompaniya (Sibneft), the integrated and fast-growing Russian oil company recently acquired by Gazprom, said the Sakhalin region was interesting for both companies. Alexei Firsov, a Sibneft spokesman, said: "There is a good resource base there, and close to Chinese and American markets".
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Publication:APS Review Gas Market Trends
Geographic Code:4EXRU
Date:Dec 12, 2005
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