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. Last Updated: 07/27/2016

Zubkov Tipped to Head Gazprom

Prime Minister Viktor Zubkov is most likely to replace First Deputy Prime Minister Dmitry Medvedev as board chairman of state-controlled Gazprom in a reshuffle prompted by the upcoming presidential elections, a top Kremlin adviser said Wednesday.

The announcement brings clarity as to who will oversee the world's largest natural gas producer if Medvedev, the front-runner in the race, wins the vote in March.

"I think that there's no other choice," said Arkady Dvorkovich, an economic adviser to President Vladimir Putin, referring to Zubkov in an interview with Bloomberg Television. It is important for the state to oversee the country's largest company, he added.

Dvorkovich was out of his office Wednesday afternoon, and no one there could immediately confirm his comments.

Dvorkovich's comments followed leaks to RIA-Novosti and Interfax, who quoted an unnamed highly placed government official as saying Zubkov could chair Gazprom's board.

The state will also nominate other new members to the board: Economic Development and Trade Minister Elvira Nabiullina, Deputy Industry and Energy Minister Andrei Dementyev and deputy head of the Federal Property Management Agency Yury Medvedev, Interfax reported, citing a source familiar with the proposals.

The Cabinet officially remained mum about the possible Zubkov nomination. "There's no official information about this and it will hardly appear in the near future," said Oleg Dukhovnitsky, the Cabinet's deputy chief spokesman. "It's news to me."

Gazprom will close the book on nominations to its board late Wednesday, a spokesman said.

The company announced Wednesday that its board would consider the nominations Monday. The board would also name the date for the annual general meeting, which will select the new board, Gazprom said in a statement.

Gazprom will release the list of the candidates only after it considers them, said the spokesman, who requested anonymity in line with company policy.

Under company rules, the board can bar candidates from seeking election only on procedural reasons. Gazprom usually holds general meetings at the end of June.

Zubkov, before being named prime minister in September, was head of the Federal Financial Monitoring Service.

Gazprom, with a market value of $312 billion, is among the world's 10 largest companies by market capitalization. A monopoly exporter of gas, it supplies more than one-quarter of Europe's needs. Gazprom hopes to build its market value to $1 trillion by 2012 or 2014, its top executives said last year.

Chris Weafer, chief strategist at UralSib, said nominating Zubkov would not change investor perception of Gazprom.

"The reality is that the most important decisions concerning Gazprom and the energy sector in general are taken at the very top of government," he wrote in an e-mailed response to questions. "To that extent, Medvedev and Putin will remain the most important people for investors in Gazprom."

Putin has agreed to serve as prime minister if Medvedev wins the March 2 vote.

Gazprom "stands every chance of achieving the Kremlin's goal of becoming the world's biggest listed energy company," Weafer said in an upbeat research note about the company Tuesday.

Raimo Valo, country manager for Icelandic financial group Glitnir, said Zubkov's appointment would be unexpected but accepted as part of the election season reshuffle. Perceived as a bit of a hard-liner because of his brusque manner and Soviet-style management habits, a Zubkov appointment might produce talk of a hardening of Gazprom's policy, but it "will die down soon and people will get on with their lives," Valo said.

Sberbank chief executive German Gref, who last fall resigned as economic development and trade minister, said Wednesday that he would like to leave the Gazprom board. "I want it, but I don't know if they will let me go," he said on the sidelines of the Troika Dialog investment forum, Interfax reported.

The other directors of Gazprom's 11-member board include three more state representatives, Industry and Energy Minister Viktor Khristenko, former State Property Minister Farit Gazizullin and presidential envoy for international energy cooperation Igor Yusufov.

Gazprom CEO Alexei Miller, his deputy Alexander Ananenkov and two more company executives also sit on the company's board. Two independent directors are E.On Ruhrgas chief executive Burckhard Bergmann and investment fund manager Boris Fyodorov. Bergman will step down as E.On Ruhrgas' chief executive at the end of next month but is staying on as an executive at its parent company, E.On.

The government will again nominate current board members Miller, Khristenko, Gazizullin and Yusufov, the source familiar with the proposals said, Interfax reported.