FSU OGM: Russia mulls Gazprom share sale

Russia continues to weigh up options for funding a $25bn, 10-year gasification programme, with the government reportedly suggesting the issue of new shares in Gazprom as a solution.

The shares would be bought by the government, according to a state report seen by Vedomosti this week. This would essentially mean that the government would help fund the gasification programme in return for equity in the state gas supplier. Deputy Prime Minister Alexander Novak estimates that the programme needs an extra RUB500-600bn ($6.74-8.09bn) in support.

The Russian state currently holds a controlling stake in Gazprom through state-owned Rosneftegaz and Rosgazifikatsiya, while almost 50% of shares are free-floated. Analysts warn such a move would hurt shareholder value.

The gasification programme aims to increase the percentage of the population with access to gas supply to 82.9% by 2030 from 71.4% at the start of this year. The aim is to reduce heating and other energy bills and reduce emissions in coal-dependent settlements.

Meanwhile, Russian companies that process ethane and LPG will be supported with a subsidy starting next year, the government reported on March 14, as part of efforts to support the petrochemicals industry. The move was approved by Prime Minister Mikhail Mishustin.

This reverse excise tax has been provided for petrochemicals projects that use naphtha, produced as a by-product of oil refining, for their feedstock for several years. But the majority of up and coming petrochemical projects in the country are set to run instead on ethane and LPG, produced during gas processing.

Starting January 2022, the reverse excise tax will amount to RUB9,000 ($121) per tonne of ethane and RUB4,500 per tonne for LPG. To be eligible for the subsidy, the enterprise applying for it will have to invest at least RUB65bn ($877mn) in 2022 to 2027. It will need to conclude investment deals with authorities on projects and report their implementation. Furthermore, these projects will need to have processing capacities of at least 300,000 tonnes per year (tpy).

If you’d like to read more about the key events shaping the former Soviet Union’s oil and gas sector then please click here for NewsBase’s FSU Monitor.