Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Gazprom Keeps Its Cool Over Investigation

Gazprom said an inquiry into foreign ownership will not threaten state control of the company or its financial stability.

Gazprom's local shares plunged 13 percent Wednesday after a lawmaker called for an investigation into whether foreigners illegally bought the stock. Deputy Interior Minister Sergei Veryovkin-Rokhalsky will supervise the investigation requested by Yury Savelyev, the ministry said Thursday. Savelyev said foreigners may get control of Gazprom.

"Gazprom treats negatively any speculations that destabilize the situation on the stock market," the company said in a statement Friday. "There are no objective grounds for a fall in the share price."

The government is Gazprom's largest shareholder with a 38.4 percent stake. It will increase that to a majority by the end of the year as it prepares to cancel a ban on foreigners' buying local shares. Foreigners can now trade only Gazprom's American depositary receipts, which value the company at $70.7 billion, about 57 percent higher than the local stock.

Gazprom wants "to calm shareholders in light of the stock's recent volatility," Troika Dialog said in a report. "We view the statement as positive, as it addresses the issue of the upcoming 'ring fence' liberalization, and the stock should react accordingly."

The government will buy shares from Gazprom units that hold about 17 percent of the company's stock and will make those purchases under "market conditions," Gazprom chief executive Alexei Miller said on June 25.

Gazprom's profit surged more than fivefold in 2003 to 159.1 billion rubles ($5.4 billion) as the company's tax liabilities shrank on accounting changes amid higher prices for natural gas.

Savelyev accused brokerages such as United Financial Group of developing "financial schemes" to allow foreigners to buy domestic Gazprom shares, RosBusinessConsulting reported this week.

There is "no risk" the state will lose control of the company, Gazprom said. The government should decide on the "legality of schemes for share purchases," it said.

Vera Zakharchuk, the prosecutor on duty at the Prosecutor General's press service, was not available to comment.

Foreign investors in 2001 owned 6 to 8 percent of Gazprom in the form of local shares via Russian-registered firms, according to industry analyst estimates.