Wednesday, May 21, 2008

GAZPROM's #1 in Natural Gas

Some investment points on Russia's largest company, Gazprom (GZPFY):

* SCALE --> Gazprom is currently the world's 2nd Largest company in terms of market cap with a valuation near $360 Billion...Exxon Mobil (XOM) is #1 with a market cap near $500 Billion. Gazprom believes it will pass Exxon and become the world's largest company by 2014.

* #1 NAT GAS Reserves --> Gazprom is the World's Largest natural gas producer and controls approx 16% of the World's natural gas reserves or 29 TRILLION cubic meters.

* AGGRESSIVELY Growing Production --> Unlike slow-moving industry giant Exxon Mobile, Gazprom is Aggressively spending on production in order to cash in on higher trending oil prices. In 2010, Gazprom plans to spend $45 Billion in CAPEX on projects related to increasing energy production and transport (this is over TRIPLE the company's capital 2007 expenditures of $14 Billion!).

* PRICING POWER --> According to Wikipedia.com, 'By the end of 2004, Gazprom was the SOLE (MONOPOLY!!) Gas supplier to at least Bosnia-Herzegovina, Estonia, Finland, Republic of Macedonia, Latvia, Lithuania, Moldova and Slovakia, and provided 97 percent of Bulgaria's gas, 89 percent of Hungary's, 86 percent of Poland's, nearly three-quarters of the Czech Republic's, 67 percent of Turkey's, 65 percent of Austria's, about 40 percent of Romania's, 36 percent of Germany's, 27 percent of Italy's, and 25 percent of France's. The European Union as a whole gets about 25 percent of its gas supplies from Gazprom.'

* NATIONAL $IGNIFICANCE --> Gazprom shares are 50% owned/controlled by Russia's government. The company employs 430,000 people and pays for 20% of Russia's annual budget. Maybe it's just me but it looks like Russia has a STRONG + Deep-Rooted interest in the continued prosperity of this company and thus Gazprom basically has the government's blessing to maintain its MONOPOLY in natural gas (the company accounts for 93% of Russia's total natural gas production).