Gazprom may list in HK amid China sales focus

PUBLISHED : Friday, 27 June, 2014, 1:04am
UPDATED : Friday, 27 June, 2014, 1:39am

Russia’s Gazprom, the world’s largest natural gas producer, has been in discussions about a Hong Kong listing and may use the yuan  in a recently agreed gas export deal with China, as it seeks to reduce reliance on the European market.

Gazprom listed on the Singapore stock exchange last week, giving it greater access to Asian investors. It has a liquefied natural gas and carbon credits trading office in the city state.

Gazprom’s American depositary receipts, which are already listed on the London Stock Exchange, have been admitted for trading on the Singapore exchange.

“We are in talks to add a listing on the Hong Kong stock exchange; the next step is upgrading the level of our listing in Singapore,” chief financial officer Andrei Kruglov told a briefing.

He said that Gazprom was preparing to receive payments in  yuan  while supplying gas to China, to which the Kremlin-controlled company plans to sell 38 billion cubic metres a year  from 2018. The deal is valued at US$400 billion.

“We are ready for payments in yuan; it is quite normal,” Kruglov said.

Analysts said a Hong Kong listing would be unlikely to increase Gazprom’s shares trading volume and liquidity by much. Dmitry Loukashov, a Moscow-based analyst at VTB Capital who covers the gas giant, said: “Gazprom’s shares are extremely liquid. I don’t think there will be significant additional trading with a Hong Kong listing.”
A barrier to a quick realisation of such a listing is the lack of an agreement between Hong Kong and Russian regulators to allow cross-market listings.

Lukoil, Russia’s second largest oil company, has suspended preparations for the listing of its shares in Hong Kong because Moscow has not ratified the  International Organisation of Securities Commissions memorandum, Russian news agency Prime quoted its chief executive Vagit Alekperov as saying last February.

Lukoil first indicated in May 2012 a plan for a secondary listing in Hong Kong by buying back  more than US$1 billion  of its issued shares and refloating them.

Rusal, the world’s largest aluminium producer, was able to list in Hong Kong because its holding company was incorporated in Jersey. It is not clear whether other Russian firms could easily get around the barrier, or find it desirable to do so, through assets restructuring.

CLSA’s head of Asian oil and gas research Simon Powell said that Rusal was “a bit of an orphan” in the Hong Kong bourse and has not  been a  big success with investors.

“One has to ask if investors would want to trade Gazprom shares in Hong Kong when they can do so in London,”  he said.