- Total number of personnel: 431.2 thousand people
- State-controlled stake: 50.002 % of the shares
- Dividends for 2011 (recommended): RUB 5.99 per share
Open Joint Stock Company (OAO) Gazprom is a global energy company focused on natural gas, gas condensate and oil exploration, production, transportation, storage, processing and marketing as well as thermal and electric power generation and sales.
OAO Gazprom is the successor of the proprietary rights and obligations of State Gas Concern Gazprom, including its rights to use land, subsurface reserves, natural resources as well as rights and commitments under the agreements concluded by the Concern. Gazprom holds the world’s richest natural gas reserves. Its share in the global and Russian gas reserves averages 18% and 72% respectively.
Gazprom owns the gas trunklines tied together into the Unified Gas Supply System (UGSS) of Russia.
In accordance with the Russian Federation President’s Decree of November 5, 1992 the Company is vested with the obligations as follows:
On February 17, 1993 State Gas Concern Gazprom was transformed into Russian Joint Stock Company (RAO) Gazprom pursuant to the Russian Federation Government’s Directive in compliance with the Russian Federation President’s Decree of November 5, 1992. RAO Gazprom was reincorporated into an open joint stock company in 1998.
As a vertically integrated energy business, Gazprom Group is comprised of the parent company – OAO Gazprom – and its subsidiaries engaged in gas, oil and other hydrocarbons production, transportation, processing and marketing, underground gas storage, thermal and electric power generation and sales as well as other activities including pipeline system monitoring, oil and gas well drilling, equipment supply, R&D, information processing and banking services.
There are more than 20 subsidiary companies engaged in exploration and development of hydrocarbon fields.
Transmission of natural gas is vested in 19 subsidiary companies conveying gas by trunklines. Seasonal and peak gas demand is met with the use of 25 underground gas storage facilities located in the Russian Federation and operated by OOO Gazprom UGS as well as 3 underground gas storage facilities located in Belarus.
Gas, gas condensate and oil are processed by six gas and condensate processing plants of OAO Gazprom as well as companies of OAO Gazprom Neft and OAO Gazprom Neftekhim Salavat.
Natural gas is sold in the domestic market primarily by OOO Gazprom Mezhregiongaz through 49 Russian regional gas marketing companies and their affiliates.
Since the late 1990s Gazprom has been acquiring stakes in gas distribution companies that own and operate medium and low pressure gas transmission networks used for gas deliveries to ultimate consumers. These assets are managed by OAO Gazprom Gazoraspredeleniye.
Gazprom’s products are exported via its wholly owned subsidiary OOO Gazprom Export.
OAO Gazprom Neft is the mainstay of Gazprom’s oil business. The company comprises around 80 oil production, refining and marketing businesses in Russia as well as countries within and beyond the former Soviet Union (FSU).
Gazprom owns three prominent generating companies in Russia – OAO Mosenergo, OAO TGC-1 and OAO OGK-2 (consolidated on the books of a specialized subsidiary company – OAO Gazprom Energoholding). Electric power is supplied within Gazprom Group by a specialized company – OAO Mezhregionenergosbyt. Gazprom Group’s power supply networks of low and medium voltage are operated by OOO Gazprom Energo.
Gazprom Group comprises structural units performing activities that are ancillary to the core business. Such activities include repair, upgrade and monitoring of the Unified Gas Supply System; process communications and R&D.
Any large corporate structure continuously changes depending on the development logic of a company. Gazprom is not an exception.
The corporate structure of OAO Gazprom has undergone reforms for improvement purposes.
As part of Phase 1, the parent company’s management techniques, regulatory procedures and budgeting system were improved.
Phase 2 was aimed at enhancing the efficiency of OAO Gazprom as a vertically integrated company and streamlining the core business management structure in its subsidiaries. In order to pursue these objectives, individual activities were concentrated within specialized wholly owned subsidiaries of OAO Gazprom.
The restructuring helped the Company unbundle cash flows in production, transmission, processing, underground storage and marketing of gas and liquid hydrocarbons as well as to significantly increase the transparency of costs.
In furtherance of the corporate governance system improvement aimed at the Company’s structural transparency and OAO Gazprom’s visual identity both in Russia and abroad, basic wording principles for subsidiary names were developed. These principles stipulate that a subsidiary’s name contains the parent company’s name – Gazprom.
As of late December 2012 the total number of Gazprom Group’s personnel amounted to 431.2 thousand people.
RAO Gazprom (since 1998 – OAO Gazprom) was privatized fully in line with the Russian privatization laws as well as the Decrees and Directives of the Russian President, and the Resolutions of the Council of Ministers – the Government of Russia.
The Decree to transform Concern Gazprom into a joint stock company was addressed by the Presidium of the Russian Supreme Council on October 26, 1992. At the time RAO Gazprom was founded, 100% of the Company’s shares were held by the Russian Federation.
As a result of the stock sale between 1993 and 1995, 41% of the shares remained under the state ownership, 10% were acquired by Gazprom in exchange for privatization vouchers, 15% were acquired by the Company’s current and former employees in exchange for vouchers (at least 50% payment) as well as for cash, 32.9% were acquired by residents of 60 Russian regions in exchange for vouchers and 1.1% were handed over to OAO Rosgazifikatsiya. A total of 8.3 million privatization vouchers and around RUB 17 billion were paid for Gazprom’s shares. 1 million 30 thousand Russian citizens became the Company’s shareholders.
Just like shareholders of other joint stock companies, Gazprom’s shareholders are basically entitled to:
A 2% ownership stake enables the shareholder or a group of the Company’s shareholders to nominate candidates for the Gazprom Board of Directors and Audit Commission as well as to propose items to be included in a shareholders meeting agenda. The shareholder or the group of shareholders possessing a 10% ownership stake may call for an extraordinary shareholders meeting of Gazprom to be summoned.
In order to efficiently protect the rights and interests of its shareholders, Gazprom was one of the first Russian companies to adopt the Code of Corporate Governance (Conduct) in 2002. The document sets out the basic principles and mechanisms enabling the shareholders to exercise their rights as well as creating conditions for the Board of Directors to efficiently control the activities of Gazprom’s executive bodies, i.e. the Management Committee and the Management Committee Chairman.
In addition to the Code requirement for corporate data disclosure to the shareholders, the Board of Directors adopted OAO Gazprom Provision on Information Disclosure.
The Company participates in and arranges numerous charitable and sponsorship events aimed at developing culture, sports, science and education, it also assists socially disadvantaged citizens.
The Company does not provide any direct financial support to its shareholders.
The Chairman and the Members of the Company’s Management Committee are elected for a 5 year term by the Board of Directors entitled to early termination of their powers.
The dividend size depends on OAO Gazprom’s net profit calculated under the Russian accounting standards in compliance with the Russian laws and regulations. The net profit is determined by the Company’s operating and financial results.
OAO Gazprom Dividend Policy was approved by the Board of Directors on October 27, 2010.
The Dividend Policy sets out the following procedure for the net profit distribution in a reporting period.
Under the Company’s Articles of Association a part of the net profit is used to form the reserve fund until the latter reaches the size specified in the Articles (7.3% of the authorized capital).
A 10% share of the net profit is reserved for dividend payouts.
40% to 75% of the net profit is reserved for the Company’s investment purposes.
The remaining share of the net profit is divided into equal parts for paying out dividends and forming a reserve for investment purposes.
The net profit intended for dividend payouts may be adjusted for the amount of Gazprom’s financial investments revaluation. This enables the Company to allocate the profit secured by the real cash flow for dividend payouts and investment purposes.
The Dividend Policy contains a provision on the dividend payouts (from 17.5% to 35% of the net profit provided that the reserve fund is formed).
The decision on the payout of annual dividends, including the dividend size and payout method, is adopted by the Shareholders Meeting on the Board of Directors’ recommendation. The size of annual dividends should not exceed the amount recommended by the Board of Directors.
In May 2012 the Board of Directors recommended that the annual General Shareholders Meeting approve the proposal to pay out RUB 5.99 per share in annual dividends based on Gazprom’s operating results for 2012.
The share emission prospectus did not originally provide for any preferred shares issue. All the shares of Gazprom are ordinary ones.
An independent auditor of OAO Gazprom is appointed through an annual competitive procedure. The procedure results are considered by the Board of Directors of Gazprom, and the auditor’s candidacy is approved at the annual General Shareholders Meeting.
In May 2013 the Board of Directors of Gazprom recommended that the annual General Shareholders Meeting approve ZAO PricewaterhouseCoopers Audit as the Company’s auditor for 2013.
OAO Gazprom and ZAO PricewaterhouseCoopers Audit started cooperating in 1995. ZAO Price-waterhouseCoopers Audit performs:
Gazprom is Russia’s largest joint stock company with several hundred thousand registered shareholders domiciled both in Russia and abroad. The state is the largest shareholder of Gazprom. In the mid-2005 state-owned OAO Rosneftegaz acquired 10.74% of OAO Gazprom shares providing the Russian Federation with a controlling stake (50.002%) in the Company. This deal reinforced state control over Gazprom that is of strategic significance for the national economy.
Between 2009 and 2010 Germany’s E.ON Group divested its 6.5% stake in OAO Gazprom and quit its shareholding in the Company. In 2009 E.ON Ruhrgas yielded its 2.93% stake in OAO Gazprom to Gazprom Group in exchange for the right allowing E.ON to join the Yuzhno-Russkoye field development project. In late 2010 E.ON sold a 2.7% stake in Gazprom to Vnesheconombank and placed 0.8% of the shares in the open market.
OAO Gazprom shares can be bought from their legal holder. Shares can be acquired under a purchase and sale agreement drawn up as per the applicable legislation with subsequent re-registration of proprietary rights in a register keeper’s office (depository) at the legal holder’s banking account location. The Company’s shares can also be bought or sold at Gazprombank offices.
Additionally, one can buy or sell Gazprom shares through a professional stock exchange broker. As a rule, such services are offered by investment companies and commercial banks.
ADR is an American Depositary Receipt publicly traded in foreign stock markets and issued against shares of a non-US company deposited with a US bank. ADR is an instrument of international stock trade. ADRs for Gazprom’s shares are issued to ensure the circulation of the Company’s shares in foreign markets. Before April 18, 2006 one ADR represented 10 shares of OAO Gazprom. Subsequently, the number of OAO Gazprom ordinary shares per an ADR was reduced from ten to four. Since April 18, 2006 it has been possible to convert OAO Gazprom ordinary shares into ADRs and vice versa.
Starting from April 21, 2011 the number of OAO Gazprom ordinary shares per an ADR was reduced from four to two. Previously outstanding shares were automatically converted according to the new ratio. This step allowed to open up access to Gazprom’s ADRs for a wider range of investors and to increase the liquidity of receipts. This will contribute to a long-term growth of the Company’s market value.
At present, Gazprom’s ADRs are listed on the London Stock Exchange, traded in the US over-the-counter stock market and on European stock exchanges, namely the Berlin and Frankfurt Stock Exchanges. As at late 2012, 26.955% of Gazprom’s shares were floating in the form of ADRs.
Yes, he/she is. There are currently no legislative restrictions on foreign ownership of OAO Gazprom shares.
OAO Gazprom ADR Program provides any shareholder with the opportunity to convert the Company’s shares into Gazprom’s ADRs. For this purpose the shares are to be deposited with a local custodian bank (currently Gazprombank), and then the Bank of New York Mellon (ADR Program depository bank) issues a relevant amount of ADRs to the shareholder’s account opened with a foreign bank. Since this depositing procedure requires a thorough understanding of the entire process (including respective paperwork, fees and timing), it is more expedient to vest the conversion operation in a securities market professional – a brokerage company or a bank that will take all necessary actions at the shareholder’s request.
At the same time, it is noteworthy that upon receipt of an ADR the shareholder becomes the owner of a foreign security and is liable to the Russian Federation currency laws.
Gazprom’s shares are traded as ADRs in foreign markets. Therefore, in order to be sold in a foreign market, shares are to be converted into ADRs first. It is reasonable to vest the conversion operation in a professional equity market player – a brokerage company or a bank that, at the shareholder’s request, will take all necessary actions.