OREANDA-NEWS. September 28, 2009. Meeting on the development of the Yamal peninsula deposits chaired by PM Putin in Salekhard produced a wave of news headlines pertaining to the Russian gas sector, reported the press-centre of OTKRITIE FC.

In particular, mass media sources reported that the Prime Minister supported a proposal to provide tax concessions for the development of the Yamal gas fields. More specifically, Gazprom chairman Aleksey Miller was quoted by Interfax as saying that the gas monopoly would welcome an exemption from the mineral extraction tax (MET) on gas produced from the Yamal peninsula fields.

The gas MET currently equals RUB147/mcm (US4.9/mcm), which means that Gazprom could save up to US 0.5bn per annum during the initial stage of the Yamal development. Deputy Finance Minister Sergey Shatalov told Interfax that it was too early to discuss specific steps, although he noted that apart from the gas MET holidays, concessions could include favorable export duty rates as well as investment credits.

View: We believe the news is marginally positive for Gazprom. While plans to provide preferential tax treatment for the Yamal gas fields have been voiced before, in our view, the fact that PM Putin publicly expressed support for such proposals increases the likelihood that they will eventually materialize.

Valuation and Action: On our estimates, Gazprom trades at P/E of 5.4x, at almost a 40% discount to our DCF-based TP (US 7.96/share). We maintain our BUY rating on the stock.