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Quick jump to below stories: Gazprom to Sell Gas to Europe at $250 Foreign Buyers Snap Up Gazprom Gazprom to manage Moldovagaz assets in Dniester Region Gazprom to buy 30 bcm of Turkmen gas in 2006 Gazprom, Belarus Agree on Increase in Gas Transit to Europe.
[Ironies abound as FTW publishes a pair of stories on utility consolidation in the U.S., while something comparable happens on a larger scale halfway around the globe. Gazprom imposes NG price hikes in country after country among the former Russian satellite states. It buys up the major gas companies of those countries or expands its stake in them. Their stock prices soar, and foreign money flows into Russia. Depending on the price to earnings ratio, more money will be made in such stock transactions than will be collected from Gazprom’s millions of customers under the new high gas prices. Though Russia’s political contest with Ukraine over gas transit has ended in the price hike Gazprom wanted, the fight showed how irritating Ukrainian intransigence could become for Russia if left unchecked. Whatever the quantity of stolen gas Ukraine might drain off from Gazprom, Russia would also be losing prestige, credibility, and foreign investment. Gazprom’s shift of pipeline traffic from Ukraine into Belarus represents a new gas route to Europe and a huge new flow of money into the coffers of both Gazprom and the Russian state to which it will surely pay its taxes in full. –JAH] Gazprom to Sell Gas to Europe at $250 Jan. 10, 2006 http://www.kommersant.com/page.asp?idr=529&id=-7922 In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Russia’s gas monopoly, Gazprom, intends to hike the average gas price for Europe to $250/ths cubic meters, Kommersant quoted Gazprom spokesman Sergey Kupriyanov as saying. It appears this move of Gazprom has dashed expectations of some European states. Bulgaria, for instance, that buys the better part of Russia’s gas at $83/ths cubic meters turned down Gazprom’s proposal to revise the ten-year contract for barter transit of gas. Moldova that used to pay $80 refused the price of $160. Romania lashed out at Russia because of $270 to $285 prices and Turkey voiced its protest in the wake of the price growth to $273 and is studying the chances to go to the International Arbitration, should the parties fail to agree on the price drop. On the other hand, Gazprom also endeavors to avoid material increase in gas price on reduction of the transit fee. The North European Pipeline that is to run through the bottom of the Baltic Sea is expected to directly deliver gas to Germany in the nearest years. by www.kommersant.com Foreign Buyers Snap Up Gazprom By Lyuba Pronina, Staff Writer The Moscow Times Wednesday, January 11, 2006. Issue 3328. Page 1. http://www.themoscowtimes.com/stories/2006/01/11/001.html In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Shares in Gazprom closed up 13 percent Tuesday, as the gas monopoly's local stock opened to international investors for the first time following a government reform put in place by President Vladimir Putin at the end of last year. The company's stock was also helped by the much-publicized deal Gazprom struck with Ukraine over the New Year's holiday, which is expected to boost its revenues by an estimated $2 billion annually. "This is something that investors have been waiting for for nearly a decade. It's the end of an era," said James Fenkner, a managing partner at Red Star Asset Management fund. While local shares are not yet available on either of the two main Moscow trading platforms, the RTS and MICEX, brokers with access to the smaller St. Petersburg Stock Exchange, where Gazprom locals are currently sold, were snapping up shares for foreigners. "We have been getting foreigners into Gazprom locals as quickly as we can," Roland Nash, head of research at investment bank Renaissance Capital, said by telephone Tuesday. No less than 57 million shares changed hands Tuesday, Nash said, roughly double the figure previously considered a good day's trading. "What happened today is that it is a level playing field, international investors are treated equally to Russian investors, they do not need to hide behind the local structure," Fenkner said. Until now, foreign ownership in Gazprom had been limited to 20 percent of the company's shares. Unable to buy the gas giant's stock domestically, the only option for foreign investors was to buy its London-listed American Depositary Shares. Yet analysts estimate that foreigners already own more than 20 percent as a result of quasi-legal gray schemes that allowed foreigners to buy rights to the gas giant's shares through Russian companies. For Gazprom, it is a momentous event, Fenkner said, because the whole idea of the two-tier system employed to protect the company from being bought by foreigners on the cheap is no longer in place. Gazprom shares surged 13 percent to a record 219.80 rubles ($7.60) by the close of trading Tuesday in St. Petersburg, the first business day in Russia after the weeklong New Year's break. Although trade was opened to foreigners Tuesday, trading in Gazprom locals is not expected to begin in earnest until the shares are included in the dollar-denominated Russian Trading System and ruble-priced Moscow Interbank Currency Exchange, analysts said. "In practice, we are not expected to see much volume in the following two weeks," said Chris Weafer, the chief strategist at Alfa Bank. "The systems for settlement of transactions [at the RTS and MICEX] are not yet in place," he added. A source in Gazprom said late Tuesday, however, that it was only a matter of days before the RTS and MICEX joined in the Gazprom stock trade. "There are no limits left; any foreigner can buy as much shares as he likes," he said. Weafer said the rise in Gazprom's local price on Tuesday followed 15 percent growth in the price of ADSs over the past five days, with the Russian market catching up after taking the first week in January as a holiday. In addition to the upcoming share liberalization, investors had cheered the deal that Gazprom struck with Ukraine last Wednesday, days after turning off its supply of gas in a dispute over prices. Under the deal, Ukraine's state-owned gas company agreed to nearly double the price it pays for Russian gas. "The reason they like it is the $1.5 billion to $2 billion in extra revenue every year Gazprom will generate from sales to Ukraine. Secondly, it confirms that Gazprom is moving away from its role as a proxy for Russia's foreign aid program," Weafer said. Looking ahead, analysts do not, however, expect Gazprom shares to continue posting gains for the rest of the year. "Gazprom shares will only surge again if it buys more oil assets like it did with Sibneft last year," said Dmitry Mangilev, an oil and gas analyst with brokerage Prospekt. Gazprom last year paid $13.1 billion for 72 percent in oil major Sibneft, which was previously controlled by Chukotka Governor Roman Abramovich. Similarly, growth on the RTS and MICEX indexes, which last year broke the 1,000-point mark for the first time, is expected to slow this year. "We won't see the same growth as in 2005," said Sergei Zagoruiko, a trader at MDM Bank, estimating the RTS would not go beyond 1,300 or 1,400 this year. Still, given the high level of oil prices, there will be something of a post-New Year's rally, Zagoruiko said. The RTS closed up 5.8 percent at 1,190.34, while the MICEX climbed 5.3 percent to 1,064.91. Russia's largest oil producer, LUKoil, soared 7 percent to a record $63.55, while the No. 4 oil major, Surgutneftegaz, surged 13 percent to $1.227. Staff Writer Catherine Belton contributed to this report. Gazprom to manage Moldovagaz assets in Dniester Region TASS January 11, 2006, 04.23 http://www.itar-tass.com/eng/level2.html?NewsID=2781906&PageNum=0 In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. CHISINAU, January 11 (Itar-Tass) - Moldova has agreed to put the assets of the joint venture Moldovagaz located in the breakaway Dniester Region under the management of Russia’s gas giant Gazprom, Moldovagaz CEO Gennady Abashkin has told the media. This arrangement has been agreed on at the ongoing talks with Gazprom on a new contract for Russian gas supplies in 2006. Abashkin would not specify the details of the terms, though. Earlier, Moldovan presidential economics adviser Oleg Reidman told the media the country’s integral gas pipeline system would be preserved and Gazprom would assume control of the Tiraspoltransgaz company – a subsidiary of Moldovagaz operating in the Dniester Region. So far Gazprom has held the controlling stake in Moldovagaz (50 percent plus one share). Moldova had another 35.33 percent, the Dniester Region, 13.44 percent, and individuals, the remaining shares. The Dniester Region’s parliament in November 2005 made a decision to quit Moldovagaz and to hand over half of its stake in the enterprise to Gazprom in payment for the natural gas debts. Gazprom to buy 30 bcm of Turkmen gas in 2006 New Europe / The European Weekly January 8 -14, 2006 Issue Number 659 http://www.new-europe.info/new-europe/displaynews.asp?id=119598 In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Turkmen President Saparmurat Niyazov and Russian gas giant Gazprom’s CEO Alexei Miller on December 29 in Ashgabat signed an agreement on Turkmen natural gas shipments to Russia in 2006, Interfax reported. According to the agreement, Gazprom is to buy 30 billion cubic metres of gas from Turkmenistan in 2006 at 65 Euro per 1,000 cubic metres. “The operating conditions for 2007 onward will be defined in the second half of 2006 as implied by the effective contract until 2028,” the release said. Earlier the price of Turkmen gas was set at 44 Euro for 1,000 cubic metres. In their statements following the signing ceremony, Niyazov and Miller stressed the importance of this document not only for the successful partnership in the gas field but for the Turkmen-Russian relation as a whole and for strengthening ties of friendship and cooperation between Turkmenistan and Russia. The Russian delegation also discussed aspects of bilateral cooperation in the gas sector in 2006 and onward. “Participants in the meeting were satisfied with the dynamic development of cooperation and the implementation of all previous understandings. The sides acknowledged the significant rise in prices on the market of fuel, materials and equipment for the oil and gas sector and agreed to adjust the price of Turkmen gas sold to Gazprom, with due consideration of these factors,” a Gazprom release read. Niyazov also thanked the Russian leadership and Gazprom for the efforts to develop relations between the two countries and said Turkmenistan would always adhere to this partnership. “We are ready to jointly access the world markets and develop energy resources. Taking this opportunity, I would like to congratulate our guest and all Gazprom staff on the New Year! I wish you successes in work and life,” Niyazov said. He added, “We recently signed a contract on the delivery of 40 billion cubic metres of gas to Ukraine. The deal envisions a slightly lower price, but I think that it is just a matter of time,” The government Turkmendovletkhabarlary agency quoted Niyazov as saying. Gazprom, Belarus Agree on Increase in Gas Transit to Europe. http://www.kommersant.com/page.asp?id=-7895 In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Widening transit of Russia's gas to Europe was in the center of attention at Sunday talks held between Belarus President Alexander Lukashenko and deputy head of Gazprom's management committee Alexander Medvedev, Interfax reported. The highlight of Lukashenko-Medvedev's talks was cooperation between Beltransgaz of Belarus and Russia's Gazprom. The parties agreed to set up a special working group, which would study definite projects to be implemented in the near term. Some of those projects relate to increasing underground storage of gas in Belarus up to 1 billion cubic meters and to extending transit facilities in an effort to widen gas deliveries to Europe through Belarus. Russia currently ships most of its gas to Western and Central Europe through Ukraine.
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