Moody's said the rating action reflects Gazprom's consistent efforts to boost and diversify cash flow generation by bringing subsidized natural gas prices for post-Soviet nations in line with Western European export prices, as well as by expanding its oil business. It also follows the company management's progress in improving efficiency, cutting costs and enhancing corporate transparency.
"The gradual development of a more diversified earnings base, rather than the high dependence on European exports which constitute a mere third of Gazprom's gas volumes, provides increasing support to Gazprom's ratings," said Philipp Lotter, Senior Credit Officer at Moody's and lead analyst for Gazprom.
The agency welcomed the Russian energy giant's efforts to minimize transit risk associated with its Western European deliveries, mainly via Ukraine and Belarus, by acquiring direct ownership in transit infrastructure, and investing in new pipelines such as the trans-Baltic Nord Stream, which will start pumping natural gas to Germany in 2010.
The stable outlook anticipates further improvements in Gazprom's financial and operational performance, due largely to prospective domestic price rises.
