Bloomberg News

Russian Stocks Advance to Record as Oil Reaches All-Time High

April 18, 2006

Russian stocks gained, with the country's key stock measures rising to all-time highs. Energy producers OAO Lukoil and OAO Surgutneftegaz led the advance as oil prices touched a record.

OAO Gazprom climbed as the world's largest natural-gas producer said its local shares and American depositary receipts are completely interchangeable, making the company's stock accessible to more investors.

The dollar-denominated Russian Trading System Index gained 1.1 percent to 1600.01 in Moscow, rising for a third session, as 21 stocks advanced, five fell and 24 were unchanged. The ruble- denominated Micex Index climbed 0.8 percent to 1441.52.

Crude oil rose to a record in New York on concern tension over Iran's nuclear program will lead to military conflict, disrupting supplies from the world's fourth-largest producer.

Oil for May delivery gained as much as 0.7 percent to $70.88 a barrel on the New York Mercantile Exchange, surpassing the record $70.85 set Aug. 30.

``Oil prices are really going toward $80 a barrel,'' said Kirill Surikov, an equity salesman at Alfa Bank in Moscow. ``The conflict with Iran is likely to develop in either a bad way or really bad way and it can only be good for the price of oil.''

Lukoil, the country's biggest oil producer, advanced 1.9 percent to a record $91.95. Surgutneftegaz, the fourth largest, rose 2.6 percent to $1.755, also an all-time high.

The RTS Index jumped 27 percent in the first quarter, the fourth-biggest advance among 77 indexes tracked by Bloomberg as higher oil prices attracted investors to Russia, the world's second-biggest crude supplier. Energy producers make up more than half of the 50-member RTS Index.

Tatneft, Gazprom

OAO Tatneft, the country's sixth-biggest oil producer, advanced 3.5 percent to $5.85. The company's profit rose 50 percent last year because of high crude prices, Interfax reported, citing a company statement. Net income increased to 36.9 billion rubles ($1.34 billion), up from 24.5 billion rubles in 2004, based on Russian accounting standards, the news agency said.

Troika Dialog brokerage today raised its estimates for Urals blend crude prices for 2006 and 2007, and increased its forecasts for earnings and share prices of energy producers including Lukoil, Surgut and Tatneft.

Gazprom gained 1.2 percent to a record $9.885. Gazprom's ordinary shares can be converted into ADRs and vice versa, the Moscow-based company said in a statement. The conversion ratio is four ordinary shares for each ADR.

Gazprom can raise the amount of traded depositary receipts to the maximum allowed 35 percent of capital, the company said.

Troika increased its price estimate for the 9 nine percent to $10 as it boosted the gas price forecast for the Russian company's sales to Europe to an average $251 per 1,000 cubic meter from an earlier estimate of $235.

Rosneft Units Slide

Units of oil producer OAO Rosneft declined after the company announced terms for buying out minority shareholders as it consolidates the subsidiaries.

OAO Rosneft-Purneftegaz dropped 25 percent to $50.50, falling from a record and ending five sessions of gains. OAO Rosneft-Komsomolsk Refinery plunged 42 percent to $125. OAO Rosneft-Sakhalinmorneftegas declined 19 percent to $27.50. OAO Rosneft-Stavropolneftegaz dropped 37 percent to $260.

Rosneft, which is planning a $20 billion public share sale, said it will buy out minority owners of its main subsidiaries by November. Aton brokerage cut the rating on Purneftegaz and Sakhalinmorneftegaz units to ``sell'' and said the buyback terms are ``well below market prices,'' analysts, led by Steven Dashevsky wrote in an e-mailed note.

China Demand

OAO GMK Norilsk Nickel, the world's largest nickel and palladium producer, gained 1.3 percent to $113.40, an all-time high. Copper, which generates about a fifth of Norilsk's revenue, had its biggest gain in nine years in London and reached a record for an eighth day as speculation about rising demand in China stoked buying by investment funds.

Renaissance Capital investment bank raised Norilsk's share- price estimate 44 percent to $125 after boosting forecasts for nickel, copper and platinum group metals.

OAO RBC Information Systems jumped 10 percent to a record $9.50. The media and Internet company agreed to buy 26 percent of mortgage company Fosbourne Home for $1.56 million, Moscow-based RBC said in an e-mailed statement.

To contact the reporter on this story: Maria Ermakova in Moscow at

To contact the editor responsible for this story: Balduin Hesse in London at

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