"This kind of transaction of purchasing shares, which are controlled by our affiliates, will be implemented under market conditions," Miller told reporters after the company's annual shareholders meeting. The government prohibits foreigners from buying Russian-traded shares in Gazprom and restricts them to proxy stocks that trade abroad. These depositary receipts currently value the company at $76.8 billion, about 48 percent higher than the local stock. The government has vowed to lift the ban, but only after it boosts its stake from the current 38.37 percent to at least a controlling 51 percent. Miller said Friday the state would obtain a majority by the end of 2004, but did not specify how the state would execute the transaction, valued at almost $10 billion. Questions remain over whether these shares should be given to the state in exchange for taxes or additional assets, or canceled as treasury stock. Gazprom management has already submitted proposals to the government for ending the share curbs, Miller said, without giving details. "We need high liquidity on the stock market to further increase our market capitalization," Miller said. "The existing restrictions ... significantly slow this progress." The lack of detail prompted Gazprom's shares to fall sharply. They ended down more than 6 percent after reaching an all-time high ahead of Friday's meeting on expectations that a schedule for eliminating the ring-fence would be announced. "Miller said nothing concrete and what he did say we knew anyway," said Oleg Maximov, analyst at brokerage Troika Dialog. Though officials want to tighten control over the firm, the meeting reduced the state's presence on the board. Shareholders voted to give managers more powers by stripping the government of a majority it fought tooth and nail to win several years ago. The state is now represented by five members instead of six, including Economic Development and Trade Minister German Gref, Kremlin chief of staff Dmitry Medvedev and Industry and Energy Minister Viktor Khristenko. However, the situation is muddied by the fact that two other pro-government nominees were re-elected -- former Property Minister Farit Gazizullin and ex-Energy Minister Igor Yusufov -- despite leaving the government during a reshuffle in March. The number of managers on the board increased to four from a previous three -- Miller, deputy CEO Alexander Ananenkov, secretariat chief Mikhail Sereda and Elena Karpel, head of the economic expertise department. Two independent directors were re-elected -- Burckhard Bergmann of Germany's Ruhrgas, and investor Boris Fyodorov, a former finance minister who competed with Vadim Kleiner, an outspoken critic of management from funds group Hermitage Capital Management. In other developments, Miller said Gazprom is seeking a stake in Royal Dutch/Shell Group's $10 billion project in Sakhalin and may announce a deal next month. "Gazprom should receive revenue from all segments of the gas business," he said. "It should act as a vertically integrated company, from gas field to gas distribution, and abroad as well." Miller said Gazprom wants to boost exports to Europe 7.1 percent next year and start using swap contracts to supply liquefied natural gas to the United States. The company is also exploring in India and Vietnam and talking with Libyan officials to drill there. Gazprom plans to improve operations by setting up four business units to run gas production, transportation, storage and oil production, Miller said. Miller also said that Gazprom will seek partnerships with troubled oil giant Yukos, which is currently fighting a $3.4 billion bill for back taxes. Gazprom isn't interested in "destabilizing Yukos," he said. PIN//Combined Sources