Fitch: Gazprom still positive

Fitch Ratings said it is keeping OAO Gazprom's senior unsecured foreign currency and local currency BB ratings on Rating Watch Positive, despite the cancellation of its merger with OAO Rosneft.

The Watch is expected to be resolved by end-June 2005, when the government is anticipated to make a decision on an increase in its ownership in Gazprom.

Although this merger has now been officially cancelled, Fitch said it believes it is probable that the state will increase its ownership share in Gazprom to 50% plus one share from 39.3% via a cash purchase of Gazprom's shares, although full details on the timing and financing of this new transaction are not yet certain at this stage.

At the same time, Fitch said it remains concerned about the company's high total debt levels and increasing operating costs over the course of 2004 and 2005.

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