. Last Updated: 07/27/2016

Gref: Gazprom Reform May Last Into Next Year

The minister in charge of Russia's structural reforms was quoted on Monday as saying that a new structure for Gazprom would be worked out next year.

The government has said it wants to draw up a plan to carve up the monopoly by the end of the year, as part of a reform of the world's biggest gas company.

But Economic Development and Trade Minister German Gref said the process was likely to extend into next year. "It probably won't work to do it more quickly, as much as we'd like to," Gref was quoted by Interfax as saying.

As well as a carve up, officials have worked on ways to unravel government restrictions on Gazprom share trade, which limit foreigners to London-listed American Depositary Shares rather than Moscow-listed stock.

Details of the share trade liberalization were given on Friday in a meeting with shareholders. Moscow brokers, reacting to the meeting, saw positive and negative points in the company's statements. The brokers said they believed it would take longer than they expected to permit foreigners to hold local shares after Gazprom's head of securities, Alexander Semenyak, told shareholders Friday that the move would require a change in law.

"If the government needs to launch the process in the State Duma, then we would expect it to take six to eight months for anything substantial to happen," United Financial Group said Monday.

But UFG said Gazprom had given hope the two-tier structure would be abolished completely and a 20 percent cap on foreign holdings in the firm gradually raised or eliminated.

Brokers said that once foreigners receive access to local shares, they would be able to convert them to ADS form, closing the gap between the ADS price and the local share price.

"Contrary to our expectations, Semenyak is positive that local Gazprom shares purchased by foreigners will be freely convertible [into ADSs]," Troika Dialog said. "If foreign shareholders are able to convert their locals [into ADSs], then there will be no price difference between the market for local shares held by foreigners," Troika said.

UFG was more skeptical, noting the main market watchdog, the Federal Securities Commission, would have to authorize the share conversion.

"Semenyak suggested the government will only want to reserve itself the right to issue such permission for the purpose of monitoring," UFG said. "However, we remain concerned obtaining permission will be more than just a formality."