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. Last Updated: 07/27/2016

Kremlin Adviser Tapped to Join Gazprom Board

The Kremlin, strengthening its hold on the country's energy sector, has put forward a second presidential adviser as a new board member at Gazprom, Interfax reported Tuesday.

Quoting an official of the Russian Privatization Agency, it said the Kremlin had put forward presidential aide Igor Shuvalov to join the board of the sprawling, state-controlled company.

The other Kremlin aide on the board is presidential chief of staff Dmitry Medvedev, who chairs the 11-member board of Gazprom, which supplies a quarter of Europe's gas needs.

"Gazprom is getting ready for a government coup d'etat," Kommersant said in advance of the company's June 24 annual shareholders meeting, at which the votes on the board candidates will be held.

Vedomosti reported Tuesday that Shuvalov would replace a current board member, such as former Energy Minister Igor Yusufov or former Property Minister Farit Gazizullin.

The other former minister would be replaced by the head of the State Energy Agency, Sergei Oganesyan.

Vedomosti said Oganesyan's presence on the board would be a very unpleasant surprise for Gazprom CEO Alexei Miller, as Oganesyan is a former executive of Rosneft, whose management has difficult relations with Gazprom.

The state had wanted to merge Rosneft with Gazprom, but later dropped this plan due to strong opposition from Rosneft, and it later chose a different scheme to boost its stake in Gazprom to more than 50 percent from the current 39 percent.

The government says it will secure control over Gazprom by buying a 10.7 percent stake in the company for $7.1 billion. This will pave the way for lifting restrictions on trade in Gazprom stock by foreign portfolio investors.

Under President Vladimir Putin, the state has reasserted its hold over the energy sector with the effective renationalization of Yuganskneftegaz, the key unit of Yukos. Once Russia's most profitable oil company, Yukos was crushed by $27.5 billion of back taxes.

Alongside Medvedev, Shuvalov and Oganesyan, the privatization agency has also has put forward for re-election to the board Miller, Economic Development and Trade Minister German Gref and Industry and Energy Minister Viktor Khristenko, Interfax reported.

Vedomosti has previously reported that Gazprom also proposed the candidacy of Matthias Warnig, of investment bank Dresdner Kleinwort Wasserstein, as a new independent board member.

Another independent board member is former Finance Minister Boris Fyodorov, the founder of United Financial Group, which has a 3.8 percent stake in Gazprom.

Challenging Fyodorov are independent candidates Vadim Kleiner of Hermitage Capital Management and Sergei Glaser of fund firm Vostok Nafta.