OAO Gazprom (OGZPY) headed for the lowest close since March in New York after the gas producer, which sends about half of its exports to Europe via Ukraine, failed to resolve a pricing dispute with the war-torn country.
American depositary receipts of Gazprom, Russia’s biggest company, dropped 2.1 percent to $6.47 at 2:08 p.m. in New York, extending this year’s decline to 25 percent. Citigroup Inc. reduced Gazprom to sell yesterday, citing the prospect of lower volumes sent to Ukraine. Moody’s Investors Service, which last week cut Russia’s credit rating to the second-lowest investment grade, yesterday gave the company a negative outlook due to its “sensitivity” to the sovereign rating change.
Russia and Ukraine failed to agree on future payments in talks brokered by the European Union yesterday and will discuss a temporary deal next week. Gazprom in June halted deliveries to Europe, which represents more than half of its revenue, as a separatist conflict flared in Ukraine’s eastern regions while international measures punished Russia for its role in the crisis. Price disputes between Gazprom and Ukraine led to European supply disruptions in 2006 and 2009.
“People are afraid of gas wars,” Ivan Manaenko, the head of research at Veles Capital LLC in Moscow, said by phone. “The talks continue but the outlook is unclear. In the worst-case scenario, if there is no agreement, it will be bad for Gazprom’s revenue.”
Russia and Ukraine will seek a temporary deal during the next round of talks on Oct. 29 to resolve the dispute, according to Energy Commissioner Guenther Oettinger.
Ukraine would pay $3.1 billion by year-end for previously delivered supplies, and Russia, which has denied any involvement in the conflict, would cut its price by $100 per thousand cubic meters to $385 through March, according to a draft deal. The EU has said it will make funds available to Ukraine within its financial assistance framework which can be used for gas payments.
Gazprom dropped 0.4 percent to 133.50 rubles in Moscow. The Bloomberg Russia-US Equity Index slipped 1.7 percent to 73.06.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net
To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Marie-France Han |