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. Last Updated: 07/27/2016

Gazprom-Itera Relationship Probed

Gazprom shareholders and the government say they have so far found nothing "reprehensible" in the murky relationship between the natural gas monopoly and Itera, the nation’s third-largest gas producer, but that doesn’t mean that Gazprom’s management is in the clear.

"I am happy with the way discussions are going and don’t have any problems with Itera," said former Finance Minister Boris Fyodorov, who represents minority shareholder interests on Gazprom’s board, at a Saturday news conference after a meeting of the board of directors.

Gazprom’s relationship with Itera was on the agenda, but a thorough examination of the ties between the two companies has been put off until a January board meeting, according to the Kommersant newspaper.

In the past, Fyodorov has been vocal in his demands to find out the real links between Gazprom and Itera. Minority shareholders fear that Itera is expanding at the expense of asset-stripping by Gazprom.

Itera has been closely scrutinized in the past few weeks. It is the primary natural-gas supplier to a slew of countries in the Commonwealth of Independent States, but its ownership and founders remain a mystery.

At the second annual energy summit Friday, the deputy chief executive officer of Gazprom, Pyotr Rodionov, said that Itera owed Gazprom 14 billion rubles ($501 million) for gas deliveries.

The Gazprom board jumped on the debt during the Saturday meeting and decided to collect the amount from Itera in the first quarter of next year.

Industry analysts saw the decision as a step in the right direction, but said it didn’t solve the problem.

"The news from this meeting would have been better if something dramatic and conclusive had happened, but finding an IOU for half a billion dollars is better than nothing," Renaissance Capital brokerage said in a research note.

Meanwhile, Economic Development and Trade Minister German Gref will oversee an independent investigation that was approved by the board.

"This will answer the question, ‘Were there some violations in the deals between Gazprom and Itera?’" Fyodorov said. "In the event that there weren’t, we will put this issue to rest."

The board also discussed where to invest Gazprom’s money.

Among the priorities, the board decided to concentrate on supporting the current levels of extraction and transport, developing underground storage facilities and modernizing production processes, Interfax reported.

Staying away from international capital markets, Gazprom plans to isolate and exploit domestic sources of capital.

Gazprom’s market capitalization is estimated at $7 billion, giving it a lot of leeway in borrowing.

By 2010, Gazprom wants to raise its exports from the current 130 billion cubic meters per year to 200 bcm per year.

And Saturday, Prime Minister Mikhail Kasyanov announced that not only did Russia intend to continue with a pipeline project that would bypass Ukraine but that there are plans to build another pipeline through the Baltic region and, possibly, through Finland.