Ruhrgas Rejects Gazprom Share Talk

German gas major Ruhrgas plans to keep its stake in Gazprom unchanged, a company representative said Wednesday after reports that it may increase its stake to 10 percent.

Ruhrgas might still increase its stake if it receives a specific offer to buy more shares at an attractive price, said spokesman Christian Drepper in a telephone interview.

"We probably could raise our stake," Drepper said. "But that's the same position we have had since 1998."

That year, Ruhrgas made its first purchase of Gazprom's shares. It has since increased its stake to roughly 5 percent through additional purchases, making it Gazprom's largest minority shareholder.

In 1999, it bought 1 percent of the company, while Gerosgaz, its joint venture with Gazprom's export arm Gazexport, acquired an additional 0.5 percent.

The Financial Times Deutschland reported Wednesday that Ruhrgas may raise its 5 percent stake to up to 10 percent.

Ruhrgas chief executive Freidreich Spath said in an interview with the paper that the company's 5 percent stake in Gazprom is "not the last word."

"If there is a possibility of increasing that stake in small steps, then we are interested," he was quoted by the Financial Times as saying, adding he would not expect to get more than 8 percent to 10 percent of Gazprom.

Steven Dashevsky, an oil and gas analyst at the Aton brokerage, said that if Ruhrgas is interested in boosting its stake in Gazprom, now would be a good time to do it for two reasons. First, Gazprom's shares are much lower than they were three years ago. Second, the government, which owns some 38 percent of Gazprom, is looking to sell 3.4 percent of its holdings in the company.

"[Ruhrgas] could buy their shares on a domestic market or in the form of ADRs [American Depositary Receipts] or from any of Gazprom's subsidiaries, such as Gazprom Finance BV," Dashevsky said.

Gazprom Finance BV is Gazprom's Netherlands-based subsidiary that holds a 6 percent stake in its parent company.

It would make sense for Ruhrgas to increase its stake in Gazprom, Russia's gas monopoly and Ruhrgas' major supplier, said Derek Weaving, an oil and gas analyst at Deutsche Bank.

"I would not view it as a financial investment [on Ruhrgas' part]," he added.

Gazprom makes up 35 percent of Ruhrgas' annual gas purchases, Hoover's news agency reported.

Ruhrgas spent about $767 million on its stake in Gazprom, according to the Financial Times.

That is just above 10 percent of total sales, which in 1999 (the latest date for which data were available) amounted to $7.3 million on net income of $400.8 million.