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. Last Updated: 07/27/2016

Gazprom Seals Deal To Reduce Its Debt

Under heavy pressure from the government, Russia's natural gas monopoly Gazprom has agreed to pay off most of its 15 trillion rubles ($2.6 billion) in tax debts by the end of June, an official said Monday.

Gazprom Chairman Rem Vyakhirev met for two hours Monday with First Deputy Prime Minister Boris Nemtsov, who has been charged with reforming Gazprom and other state-controlled monopolies.

The two agreed that Gazprom, Russia's largest company, will cover "a significant part'' of its debts for taxes and State Pension Fund contributions by the end of June, according to Nemtsov's spokesman, Andrei Pershin.

"They may not pay off every kopek, but this issue must be cardinally resolved over May and June,'' Pershin said. He noted that the government also pledged to ensure that it pays off any debts owed to Gazprom for supplies to state organizations.

Vyakhirev promised last month that Gazprom would pay $1.2 billion -- roughly half of its debt to the state -- by June 10, but warned that the company might have to borrow heavily to raise the cash. Analysts said Gazprom's new promise to pay most of its back taxes is part of a drive to mend rocky relations with the government.

"Gazprom can pay its debts if it feels an outside threat," said Karen Vartanov, an analyst at Rye, Man & Gor Securities. "It can find money ... [to] live a little easier with the government."

Word of the pledge to settle most of Gazprom's debts had little effect on the company's shares, which closed at $0.63 Monday. At Monday's meeting, Vyakhirev and Nemtsov also agreed to draft a presidential decree spelling out Vyakhirev's increased responsibilities as trustee for a 35-percent stake in the company owned by the government.