Free Preview of Members-Only Content
To view the requested intelligence, you must be a Stratfor.com member.
Russian Prime Minister Mikhail Fradkov said Sept. 14 state-managed natural gas giant Gazprom would wholly acquire state-owned oil firm Rosneft. Sources in the Russian government indicate that the decision has already been made to roll part of Yukos, the country's beleaguered private oil major, into the mix as well.
The government owns all of Rosneft, as well as 38 percent of Gazprom. Via a number of indirect means, the state holds another 17 percent of Gazprom.
In a meeting with Russian President Vladimir Putin, broadcast by state-run Pervyi Kanal television, Fradkov said the merger is designed to hasten share liberalization of Gazprom. The portion of Gazprom not held by the state is traded in two tiers separated by a "ring fence" that creates different rules for the price of shares at home and abroad, complete with differences on voting rights for those shares in Gazprom decision-making. In other words, the Russians fear that without limits on how foreigners can purchase or use their shares in Gazprom, foreigners could end up controlling the company.
Merging a partially state-owned firm (Gazprom) with a wholly state-owned firm (Rosneft) creates a mostly state-owned company (that sources indicate will be called something creative, like Gazprom with a subsidiary named Gazneftprom). What this means is, the Russian fear can now no longer be realized, so the "ring fence" to limit foreign ownership can be eliminated and Gazprom(-Rosneft) shares will soon be able to freely be traded equally in Russia and abroad. The net result should be a surge of international interest in Gazprom shares. Most mutual-fund managers would find it silly to not hold a bit of the world's largest natural gas firm and Europe's primary supplier.
The official explanation is indeed the truth, but this being Russia there is, of course, a riddle wrapped in the enigma. The government is about to renationalize Yukos, the country's largest oil firm.
| Stratfor Members, please log in at the top left hand corner |
