How can you buy Gazprom Energy shares?
Gazprom Energy is a large Russian company that exports natural gas to Europe and China. Despite the politically unstable situation, it can be interesting to invest in Gazprom. In this article, we discuss how & where to buy Gazprom stocks.
How can you invest in Gazprom?
An investment in Gazprom can be interesting: the company controls a large part of the world’s natural gas reserves. But what is the best way to invest in Gazprom shares?
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Where can you buy Gazprom stocks?
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Is it wise to invest in Gazprom?
Gazprom is not welcomed by all investors with open arms. This is because Gazprom is controlled by the Russian government: the government owns the majority of the shares. They therefore regularly use natural gas access as a political weapon. When the government cuts off supplies to certain countries, it is bad for Gazprom’s operating results. It is therefore important to keep an eye on the Russian government when considering an investment in Gazprom.
However, there are also sufficient reasons why an investment in Gazprom could be interesting. For example, the company pays out a high dividend percentage: the Russian company wants to pay out 50% of the net profit. The pipeline to China has also made the company less dependent on Europe. An investment in Gazprom could therefore certainly turn out well: however, it is important to keep a close eye on the political and economic situation in Russia.
And don’t forget the competition: certainly on the national market, there are more and more players active. Consider, for example, Novatek and Rosneft. The price of Gazprom shares fluctuates greatly with the price of oil; it is therefore advisable to keep a close eye on this when considering an investment in Gazprom.
Worldwide, Gazprom, with a share of 15%, is one of the largest gas suppliers. In 2005, the Russian government acquired a majority stake with 50.0002% of the stocks. The gas company supplies natural gas to many countries in Europe. The natural gas is mainly supplied to ex-Soviet states and to countries in Central and Eastern Europe. For decades, it has supplied natural gas to European energy companies such as Essent and Nuon.
In May 2007, Gazprom EP International B.V. was established in Amsterdam. This is, outside Russia and the former Soviet states, a special branch of Gazprom. The company owns 51% of the shares of the Nord Stream gas pipeline through the Baltic Sea. Gazprom also has a 9% interest in the BBL pipeline. This pipeline connects the Netherlands with Great Britain. Moreover, in the Netherlands the company has a share in Gas Storage Bergermeer. Gazprom will inject gas into that gas storage site.
Gazprom’s headquarters are in St. Petersburg, Russia.
Soviet President Mikhail Gorbachev had the ministries of oil and gas merged in the 1980s. This was part of his economic reform programme. Thus, on 8 August 1989 the Russian state company Gazprom was created. This state-owned company was the body for the production, distribution and sale of gas.
The company was privatized in November 1992. This happened after the Russian President had taken a decision to that effect. The transformation of the state-owned company into a national corporation took place, among others, through the sale of vouchers. The sale of these vouchers was subject to strict conditions. For instance, foreign shareholders were not allowed to buy more than 9% of the stocks. The privatized company Gazprom concluded the first partner agreements with foreign companies in 1993. Partner agreements were concluded with Finland’s Neste and France’s Gaz de France.
Gazprom supplies gas to China
In 2014, Russia and China signed a mega contract. Gazprom will supply China with natural gas for 30 years on behalf of Russia. With China, Russia has gained a second major foreign customer after Europe. This is important for the Russian economy. The contract has an estimated value of 400 billion dollars. To deliver the natural gas, the “Power of Siberia” pipeline has to be built. This will require an investment of around $55 billion.
With China being a new customer of Gazprom, the company becomes less dependent on the political relationship with Europe. The increased tensions are a threat to Gazprom and this new cooperation strengthens the company’s position. This can be a good reason to invest in Gazprom by buying its shares.
According to analysts, Gazprom is an attractive stock. The fact is that natural gas is cleaner than coal. Coal-fired power stations to generate energy are therefore increasingly being replaced by gas-fired power stations. The demand for natural gas will therefore increase worldwide and Gazprom can benefit from this.
Due to COVID-19, the stocks of gas companies suffered a major blow. Meanwhile, gas prices are on the rise again worldwide. The new gas pipeline to China, which has now been completed, has given the company new sales opportunities. Moreover, investors receive a dividend yield of 7.2%. Therefore, although Russia is risky and its management leaves much to be desired, many analysts consider this company’s shares to be an attractive one.
Do you have confidence in the future of Gazprom? In that case, it might be interesting to buy Gazprom shares.