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. Last Updated: 07/27/2016

Gazprom to Establish Share-Trading Center

Gazprom shareholders will soon be allowed to sell their shares more freely on the domestic market, but the slight opening up of the gas monopoly marks only the first of many steps needed to create a domestic market in the firm's shares, analysts said Monday.


Alexander Yakovlev, head of Gazprom's securities department, told news agencies last week that the company's shares will be traded in an auction center to be established at Gazprombank within two weeks.


But the move has not eased a strict policy which requires shareholders to obtain approval from the company's management to sell their shares.


"Nobody has changed that policy," Yakovlev said Monday. "But buying and selling will take place freely through the auction center at Gazprombank."


One analyst said the policy is unlikely to make much of an impact in creating a domestic market for the gas giant's shares. "Just moving the shares to an auction center wouldn't make much difference if the other restrictions aren't removed," said Stuart Amor, an oil and gas analyst at CS First Boston. "It's a step in the right direction, but there are a number of steps to go."


Besides gaining management approval, Gazprom also requires shareholders to first offer the shares to the company itself, which sets a book value for them.


Because of these rules peculiar to Gazprom, the stock is not actively traded, with only a handful of Moscow brokers quoting it, analysts have said. It was removed from The Moscow Times Index in July because the trading of Gazprom shares is not representative of movements on the market as a whole.


Amor said if restrictions were removed, the move would likely boost Gazprom's market price, which is currently quoted at between 7 cents and 15 cents per share.


"If it can get its domestic share price up -- which it will do because it creates liquidity -- it will be easier to sell shares on the international market," he said.


Gazprom has acquired 10 percent of its own stock, earmarked to be placed abroad. "If they do ever want to sell the 10 percent internationally they'll want to sell at a premium of the domestic price," Amor said.


While greater liquidity could push the share price up, employees -- who own 15 percent of the company -- could decide to get rid of their shares.


"There are plenty of workers who would like to sell," said German Zvezdin, a senior equities salesman with Troika Dialog. "They will realize that the stock is liquid, traded on the market -- they probably would like to sell."


Zvezdin said Gazprom will be a major name on the market if and when it opens completely. So far, under the new scheme, foreigners will not be allowed to purchase the shares sold at the auction center.


Yakovlev said there is nothing unique about Gazprom restricting sales to foreigners. "It's just like your rules, nothing more, nothing less," he said. "There are similar restrictions in Western Europe."