Gazprom investors lack Rosneft’s Qatari airbag

3 minute read

The logo of Gazprom company is seen at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 15, 2022. REUTERS/Anton Vaganov

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LONDON, July 1 (Reuters Breakingviews) - When it comes to Russia’s view on Western investors, Rosneft (ROSN.MM) looks like the exception that proves the rule. Moscow confirmed on Thursday it would allow the $73 billion oil giant to pay a dividend, having stopped $93 billion peer Gazprom (GAZP.MM) from doing the same. The nature of their respective share registers may explain why.

The Russian state’s block on the $20 billion payout, announced at Gazprom’s annual general meeting, is no great shock. Moscow controls half of Gazprom’s shares, but Western blue chips like BlackRock (BLK.N) and Vanguard own much of the rest. Russia’s invasion of Ukraine and the ensuing sanctions mean state-backed Russian companies have no hope of raising Western capital, meaning the days when risk-seeking overseas investors trousered fat dividend yields are over. Even though Gazprom shares slumped 30% on the news, boss Alexei Miller won’t be that bothered.

The Kremlin will, meanwhile, not end up out of pocket. On the same day as the dividend block, domestic lawmakers backed a one-off increase to Gazprom’s mineral tax that amounts to around $8 billion. Instead of pandering to overseas investors, Gazprom can use the saved cash to spend $10 billion by 2025 to improve domestic gas infrastructure. Other familiar Russian companies like $60 billion Sberbank (SBER.MM) and $9 billion Alrosa (ALRS.MM) already scrapped their dividends.

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Rosneft’s more generous treatment regarding its own $8 billion payout is unlikely to reflect any sort of change of heart towards its own Western investors like BP (BP.L), which took a big write-down on its Russian exposure. It might, however, have something to do with the fact that Qatar retains a near 20% stake. Unlike Moscow’s dramatically cooler relations with Europe and the United States, Gulf players like the tiny gas-rich emirate have maintained a more neutral stance on Russia, underlined by the fact that Rosneft just announced a new Qatari chairman for its board.

Exactly how easy it is for any foreign investor to claim Russian corporate dividends is a moot point. Rosneft boss Igor Sechin recently suggested Moscow wouldn’t create obstacles, but also said any dividends would have to go via a special account. What’s more clear is that the oil driller’s payout policy is almost certainly the exception.

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Gazprom decided not to pay record dividends on last year’s results, Russia’s gas giant said on June 30, the first time it will not pay out since 1998.

The decision reversed a board recommendation to pay a dividend of 52.53 roubles per share, or $20 billion, in what would have been its biggest ever payout.

Gazprom would rather focus on Russian regional gasification, preparation for the heating season and paying increased taxes, Deputy Chief Executive Famil Sadygov said.

Russian lawmakers on June 30 backed a draft bill that would provide for a one-off increase in Gazprom’s mineral extraction tax bill by 416 billion roubles ($8 billion) this year.

Rosneft approved the payment of its record dividend on June 30.

Shares in the gas producer fell 30% on June 30 and were suspended on July 1.

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Editing by George Hay, Streisand Neto and Oliver Taslic

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Dasha is a columnist in London writing about the consumer goods sector, as well as Russia and Turkey. She has been at Reuters since 2012 as deals reporter in London and Turkey correspondent, covering the 2016 coup and the war in Syria. Prior to that she produced business news on BBC radio and worked as an investment banking analyst. She holds a degree in Politics, Philosophy and Economics from the University of Oxford.