It's finally happened.

After months, nay, years of speculation, Russian President Vladimir Putin finally signed into law the Gazprom (OTC BB: OGZPF) Share Emancipation Act (not the official title). For the first time ever, foreign investors are free to buy as many shares of the Slavic gas behemoth as they like.

Chances are, they'll buy a lot. Here's why:

  • Gazprom controls 25% of the world's natural gas reserves.
  • In 2004, it produced 20% of all natural gas sold on world markets, and 25% of all natural gas sold to Europe.
  • It operates the longest gas pipeline network in the world.

Those numbers may induce drooling in emerging markets fund managers and individual investors alike. And up until this week, owning a piece of Gazprom was an exceedingly tricky matter. By law, Russia forbade foreign ownership of its crown jewel (Gazprom pays 25% of all federal taxes going into the Russian state till) exceeding 20% of all outstanding equity. As a result, three markets for the company's shares appeared. Within Russia, shares traded at a discount of approximately 20% to the price the shares American Depositary Receipts (ADRs) fetched abroad. The third "market" was that for so-called "gray shares" -- Russian-based shares that clever lawyers managed to pseudo-legally place in the hands of foreign owners.

This week, all of that began to change. Gazprom's shares can now, in theory at least, trade freely abroad through ADRs packaged for sale by Bank of New York (NYSE:BK). Although today, those shares trade primarily on the London exchange and can be purchased in the U.S. only over the counter, Gazprom has made noises about upgrading its disclosures and listing its shares on the NYSE in the near future. Between the company's own inherent attractiveness and the newfound ease of buying its shares that comes with an NYSE listing, Gazprom ADRs could soon become as popular among U.S. investors as such well-known foreign brands as LG. Philips (NYSE:LPL), ING, and Toyota (NYSE:TM).

I'd therefore expect an NYSE listing to quickly spark a rise in the value of Gazprom's shares. Still, Fools will be well advised to tread warily here -- if for no other reason than on valuation concerns. Gazprom shares have already more than doubled this year on expectations of their emancipation. As a result, the company now sports a $160 billion market cap, weighed against its expected $6 billion of profit in 2005, which gives Gazprom a P/E of 27. That's far more than the valuations more proven performers such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), or ConocoPhillips (NYSE:COP) receive. And it suggests to this Fool that Gazprom shares -- freely traded or not -- are comprised in no small part of hot air.

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Fool contributor Rich Smith does not own shares of any company named above.