Source Pravda.Ru

Gazprom Slumps Following Price Rise Decision

Gazprom shares had their biggest intraday fall since July 2001 after Russia set price rises lower than was expected for natural gas, forcing the world's largest producer of the fuel to go on selling gas at home for a loss.

Russia decided to increase gas prices by fifteen percent as of July, while investors had expected a rise of twenty percent. Gazprom American depositary receipts plunged as much as $1.72, or eleven percent, to $13.75, the lowest since February 7th, 2001. The ADRs have lost as much as nineteen percent since the decision.

Gazprom ADRs had tripled this year as the government increased control of the company and worked to regain assets the gas producer lost hold of in the 1990s. The government's decision to cap gas prices low enough to curb inflation deflated optimism that President Vladimir Putin would favor Gazprom in the face of calls from other industries for lower energy costs, analysts said.

“Gazprom was holding relatively well, overperforming the market for the past two weeks because people were hoping for good news to come from the government, or from the shareholders meeting,” said Peter Boone, head of research at Brunswick UBS Warburg. “The good news didn't come. Given how bad emerging markets look now, Gazprom was bound to catch up with the market.”

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