Putin’s Shanghai Expedition Drives Up Gazprom: Russia Overnight

By Halia Pavliva and Ksenia Galouchko May 18, 2014

President Vladimir Putin’s planned China visit this week is helping spark the longest rally in OAO Gazprom since 2006 as speculation mounts that he will return with a long-sought gas supply agreement.

Gazprom, the world’s largest natural-gas producer, has climbed eight straight days, rallying 15 percent over the period to 144.29 rubles ($4.15) in Moscow. The stock has gained 12 percent this month, compared with a 1.1 percent advance in the Stoxx 600 Oil & Gas index and the MSCI Emerging Markets Energy index’s 5.7 percent increase.

The stock is surging as traders read the president’s visit as a sign Russia is on the verge of getting the long-term gas supply contract it has sought for a decade. Putin is turning to Asia as the West expands sanctions tied to the incursion in Ukraine. After failing to agree on financial terms in previous talks, rising demand for fuel in China has pushed prices to a level that will probably be acceptable to both sides, Bank of America Corp. said in a May 16 report.

“Russia and China are closer to a deal than they’ve ever been before,” Karen Kostanian, an analyst at Bank of America, said by phone from Moscow last week. “While Russia seeks to diversify its natural gas exports away from Europe, China wants to diversify its fuel imports.”

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