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. Last Updated: 07/27/2016

Gazprom Says to Speed Up Removal of the Ring Fence

Gazprom's board of directors said Tuesday that the gas monopoly must speed up liberalizing trade in its shares, a long-time demand of foreign investors.

No time frame for the reform was given, however.

Gazprom has said it will eventually remove the major stumbling block in Gazprom trading -- the so-called ring fence -- which reserves trading in domestic shares to Russian residents while foreigners have access only to much more expensive American Depositary Shares.

Analysts said Gazprom was just sending out a positive message rather than taking practical steps toward removal of the ring fence.

"It is a positive sentiment, but it is difficult to say what actually changed in terms of a practical concrete plan," said Stephen O'Sullivan, the head of research at United Financial Group.

Final decisions in regard to trade liberalization rest with the government.

Before share trading can be liberalized, the government should take proper control of Gazprom and possibly increase its stake to 51 percent, Interfax quoted a source close to Gazprom's management as saying.

Gazprom officially holds some 39 percent of Gazprom, with another 12 percent as treasury stock.

The board also discussed boosting the number of exchanges on which Gazprom shares can be traded to include the Moscow Interbank Currency Exchange, the source said. but no time frame was set.

Gazprom officials earlier said that share-trade liberalization would lead to rapid growth in capitalization from the current $17 billion to around $50 billion.

O'Sullivan said capitalization growth would depend on the government's approach to gas tariffs, overall reform and factors such as European demand for gas.

In the long term, Gazprom shares are a good investment, he said, "But long term can be quite a long time in Russia."