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Gazprom Gains on Record Dividend Plans, 2012 Spending Cuts

OAO Gazprom, the world’s biggest gas producer, gained the most in almost seven weeks after saying it may double its dividend payout for 2011 to a record and cut planned investments for next year by 39 percent.

The stock jumped 3.9 percent, its biggest gain since Nov. 2, to close at 172.45 rubles in Moscow.

Gazprom may pay out 199 billion rubles ($6.2 billion) in dividends for this year, Russia’s biggest company said after a board meeting today. That amounts to 8.39 rubles a share and is subject to a board recommendation that will be made in spring 2012 and shareholder approval, according to Gazprom’s statement.

“It’s a signal of a change in policy, a more or less permanent change in dividend policy,” Ronald Smith, director of oil and gas research at Citigroup Inc. in Moscow, said by phone today. “The cash has to come out of somewhere in the budget, which effectively means the capex budget.”

Capital expenditures will account for 710 billion rubles of the 777 billion rubles of investments budgeted for next year, Gazprom said. This year’s investment plan was raised to 1.28 trillion rubles, 56 percent higher than the amount set in November 2010. The board reviews plans after first-half results.

Gazprom’s investment program will probably be increased, said Alex Fak, an analyst at Troika Dialog. The dividend “indicates that the government has an unbalanced budget and needs cash, rather than any change in corporate governance.”

Gazprom’s spending in 2012 will include deposits and pipelines in the Yamal region above the Arctic Circle and the east, the Shtokman offshore gas field and an upgrade of the nationwide transportation network it owns. The gas exporter also plans to expand overseas projects in Africa, Bolivia, the U.K., Vietnam, Latin America and Uzbekistan, as well as the Nord Stream and planned South Stream pipelines to Europe.

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