Bloomberg News

Dvorkovich’s Appointment to Boost Energy Shares, Citigroup Says

May 22, 2012

OAO Lukoil and OAO Gazprom may gain on expectations of reforms following President Vladimir Putin’s decision to appoint Arkady Dvorkovich to oversee the energy industry instead of Igor Sechin, according to Citigroup Inc.

Putin replaced Sechin, who opposed selling state assets, with Dvorkovich as a deputy prime minister in charge of energy yesterday. Dvorkovich is seen by investors as a “liberal and in favor of privatization,” Citigroup analysts said in an e-mailed note today.

“Classic cheap energy stocks, like Gazprom, Lukoil, may gain on the appointment of Dvorkovich instead of Sechin,” Kingsmill Bond, chief equities strategist at Citigroup in Moscow, said by phone. “We don’t know what the reforms will be but clearly, as a rule, cheaper stocks tend to benefit on reform agendas.”

Lukoil, Russia’s biggest non-state oil producer, lost 0.9 percent to 1,624 rubles by 5:27 p.m. in Moscow after rising 2.2 percent to 1637.90 rubles yesterday. Gazprom, Russia’s state-run gas producer and exporter, added 0.9 percent to 143.32 rubles after rallying 2.6 percent to 142.02 rubles yesterday.

Lukoil trades at 3.7 times estimated earnings, compared with 9.3 times for PetroChina Co. Ltd. Gazprom trades at 3 times estimated earnings.

Interfax reported today that Medvedev named Sechin to become chief executive officer of OAO Rosneft.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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