Gazprom expects its capitalization to grow by more than $30 bn by 2020 owing to capitalization of its sub Gazprom Neft.

November 30, 2006

Gazprom OJSC expects its capitalization to grow by more than $30 bn by 2020 owing to the increase in the capitalization of its subsidiary Gazprom Neft, says the article “Oil Strategy” published in Gazprom’s corporate journal.

“Upon the beginning of their development [of Gazprom's oil reserves] by forces of Gazprom Neft, quotations of shares of the parent company and of its oil subsidiary are expected to grow considerably. As estimated by international consultants, Gazprom Neft will cost at least $40 bn by 2020. In this case, the capitalization of Gazprom, the oil company’s major shareholder, will also increase by some $30 bn,” the article reads. It is also noted that these estimations are quite conservative as they are based on the long-term outlook of the global oil price – $40 per barrel.

From RTS quotations, today Gazprom’s capitalization totals about $278.164 bn; that of Gazprom Neft is $19.5 bn.

In addition, “there are no plans to attract a strategic partner in Gazprom Neft’s shareholders in the foreseeable future, though her shares continue to be quoted on the exchange. At the same time, cooperation with various oil companies on a project basis can give a great positive effect.”

The parent company is planning to fully pay off the debt of its oil subsidiary by 2012.