Gazprom to terminate natural gas depositary receipts
Russia’s state-owned natural gas producer Gazprom is expected to terminate its depositary receipts today.
The termination is a result of a new law in Russia that aims to restrict the ability of foreign investors to buy stakes in Russian companies seen as critical for its national security. Consequently, the termination of Gazprom receipts will heavily restrict the ability of international investors to acquire shares in the company.
These restrictions show that Russia is willing to partially sacrifice the financial position of critical companies for security reasons. As a result, the Russian government is likely to be increasingly empowered to exert control over critical natural gas resources without resistance from foreign stakeholders and keep control of an important revenue stream. However, restrictions on foreign investment will negatively affect the ability of companies such as Gazprom to operate internationally. While Russia’s profits from natural resource exports have increased significantly in the short-term, Russian gas exports face an uncertain future as its European customers seek to diversify their supply chain—the EU recently agreed upon a Russian oil embargo following on from its earlier coal embargo— and natural gas likely to be targeted in the medium to long-term.
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