Gazprom to lift curbs

Russian gas monopoly Gazprom said on Wednesday it was on track to lift curbs on foreign ownership of its shares, easing concerns among investors.

"Preparations for liberalising the market in Gazprom shares are going according to the planned timetable and in strict accordance with the orders given by the president and government of Russia," Chief Executive Alexei Miller said in a statement in Moscow.

"Liberalisation of the market for its shares will take place in full, with a (20 percent) ownership quota for non-residents envisaged as the final result," he said.

Gazprom shares were up 2.4 percent at 71.3 roubles by 1030 GMT on Wednesday.

Miller also said the merger of Gazprom with state oil firm Rosneft, which will allow the government to boost its stake in Gazprom to over 50 percent from 39 per cent now and lift curbs on foreign ownership, would take place in the near future.

The merger suffered a setback when a US court ruled that Gazprom must not participate in the auction of Yuganskneftegaz, the key operating asset off crippled oil firm YUKOS sold off to pay back massive YUKOS tax debts.

Rosneft eventually took control of Yugansk, although it remains unclear how it funded the $9.4 billion acquisition, sparking worries that Rosneft's value would not be enough to give the state the necessary 50 percent in the merged entity.

Rosneft's purchase of Yugansk in December has complicated its planned merger with Gazprom, which the market now expects to be delayed, therefore pushing back the timetable for share trade liberalisation.

Fund managers said the market also doubted the government would open up a substantial portion of Gazprom shares to foreign ownership.

"The Yugansk sale has thrown a spanner in the works," said Martin Taylor, hedge fund manager at London-based Thames River Capital, which runs $5.5 billion of assets.

"There are concerns that a large number of foreign investors will not have enough shares to swap their ADRs into. A few months ago, many people believed foreign ownership limit would be increased to 49 percent from the current 20 percent, but now the noises we are hearing suggest it will only go up to 25 percent," he said.

Currently non-Russians can only own Gazprom's American Depositary Shares, which trade in London at a premium to rouble-priced ordinary stock. Foreigners are currently banned from owning more than 20 percent of Gazprom.

Gazprom was a star performer last year when its stock rallied by more than 100 percent on hopes of the share trade liberalisation, promised by President Vladimir Putin.

But Gazprom shares have fallen by 8 percent in the past month and are down nearly 20 percent from their high on Nov. 18 amid concern about the timing and scale of the share trade liberalisation.

Gazprom is one of the biggest emerging market plays for hedge funds and long-only funds, with its free float estimated at 20 percent, worth around $11 billion at current prices.

Investors say a full liberalisation of Gazprom's share trading would turn the firm into a must-own stock in all emerging markets portfolios, while the market capitalisation of the world's largest gas producer could double to $100 billion.

"Further delays in the consolidation of Rosneft into Gazprom are possible, as it seems there is no agreement yet within the government on the scheme governing this transaction," Alfa Bank analysts wrote on Wednesday.

"Gazprom continues to suffer from the lack of a resolution on the Yugansk issue and the threat of legal action hanging over it."

(Additional reporting by Elif Kaban)