By Elena Mazneva
Russia’s largest company OAO Gazprom will stop marketing to U.S. and European investors after the Crimea crisis and work to increase bond and shareholders from the Middle East, Latin America and Asia, especially China.
Senior managers at Russia’s gas-export monopoly, which has a market value of $90 billion and $37 billion of outstanding bonds, told investor relations staff to find more shareholders in Asia and other emerging marketsafter completing investor meetings in New York and London in early March, two people with knowledge of the matter said, asking not to be named because the policy is private.
The shift shows how the worst crisis in Russian relations with the U.S. and Europe since the Cold War is feeding into financial and economic relationships. China was the only country not to vote against Russia’s action in Ukraine at the United Nations Security Council and President Vladimir Putin travels to Beijing in May hoping to sign a 30-year gas-supply deal.
U.S. investors own about 10 percent of Gazprom shares through American depositary receipts, making them the largest investors after the Russian state, which holds 50 percent. U.K. funds hold about 5 percent, according to the company’s website, which doesn’t give data for Asian investors.
While Gazprom’s investor relations team won’t be prevented from traveling to the U.S. and Europe, they won’t actively market there and will spend more time working in Middle East and Asian countries, the people said.
Gazprom’s press office declined to comment.
The crisis over Putin’s decision to annex Crimea has highlighted the strength of the relationship between Russia and China, the world’s largest energy consumer.
Russia is “grateful to the people of China” for their position on Crimea and Ukraine, Putin said March 18. Eastern partners are more constructive, wiser and pragmatic than Western, Economy Minister Alexei Ulyukaev said a week later, adding that Russia should sign new contracts and agreements in Asia.
“Western sanctions may bring Russia and China closer together,” wrote the Russian Embassy in Beijing on its official Sina Weibo account on March 25.
Gazprom Chief Executive Officer Alexey Miller together with Deputy Prime Minister Arkady Dvorkovich plans to visit China next week, people with knowledge of the matter said. Among a range of issues, greatest prominence will be given to a 30-year natural gas supply contract, one of the people said without elaborating.
Gazprom executives also plan to visit the Boao Forum next week, considered an Asian alternative for theWorld Economic Forum in Davos. Not only Miller and Dvorkovich, but also Gazprombank head Andrey Akimov and Gazprom Neft (SIBN) CEO Alexander Dyukov are scheduled to participate, according to itswebsite.
Gazprom stock fell as much as 17 percent a month ago, the day after the U.S. and European Union leaders said that Russia would face sanctions and economic isolation, and remains about 3 percent below its level before the announcement. The stock rose as much as 1.6 percent to 136.6 rubles in Moscow today.
The second-largest corporate borrower in Russia after state-run OAO Rosneft (ROSN), Gazprom debt in bonds includes $18 billion denominated in U.S. dollars and 10 billion in euros as of September last year, according to data compiled by Bloomberg.
Confrontation between Russia, the U.S. and EU could push Gazprom to seek debt funds in Asia, said Maxim Edelson, an analyst at Fitch Ratings Ltd.
While it may seek loans from Chinese banks as part of the proposed natural gas supply contract, Gazprom also may market a debut $1 billion to $1.5 billion bond loan in Asia this year, Edelson said. Gazprom’s annual bond program is usually $5 billion to $9 billion, according to Edelson.