Gas Wars

In the wake of recent adverse publicity about its London flotation, sparked by concerns about low corporate governance standards (but also about the shadowy nature of the enterprise itself) Russian energy company Rosneft is now said to be planning cutbacks in the size of the venture. The Guardian's industrial editor writes that

the oil giant was expected to sell up to £11bn of shares through an initial public offering that would have seen up to 49% of the company's equity offered to investors but is now planning to reduce the figure to about £4bn-£5.5bn, according to reports this weekend.

Gazprom, Vladimir Putin and the Russian government are also involved:

The Kremlin is expected to sell only sufficient shares to cover the £4bn cost of its purchase of a controlling stake in another Russian energy group, Gazprom. It is believed it took the decision to limit the size of the flotation because of the positive impact of the high oil price on Rosneft's finances.

Last week the head of corporate governance at the leading London investment company F&C Asset Management advised investors to “tread carefully when considering investing in Rosneft”. All this follows reports that William Browder, the head of Hermitage Capital Management, the largest foreign investor in Russia, has been barred from entering Russia since late last year, and the threats made by Gazprom's deputy head, Alexei Miller, that any attempts to block the company's expansion in Europe would "not lead to good results".

The British government has been concerned about a possible bid from the Russian energy group for Centrica, the parent company of British Gas. The British government has since made it clear that it would expect any approach from Gazprom to be dealt with by the competition authorities, not by ministers.

According to the Guardian, London is now seen as a "destination of choice" for Russian companies "keen to cash in on investor enthusiasm for the natural resources sectors."

Last week London was once again host to the so-called Russian Economic Forum, organized by Eventica.

A reader comments:

Browder supported the Kremlin pros(pers)ecution of Khodorkovsky and must have expected reciprocity instead of having his visa revoked; that was written up in the Moscow Times when it happened.

The extent of Putin’s interventions on behalf of Gazprom outside Russia is revealing.