Russia approves plan for Gazprom-Rosneft merger

Eric Watkins
Senior Correspondent

LOS ANGELES, Mar. 15 -- Russia has approved the plan for the merger of OAO Gazprom, the country's giant gas monopoly, and OAO Rosneft, the state-run oil company.

The merger, the biggest in Russian history, will allow the government to transfer its current 100% stake in Rosneft into Gazprom and increase its share of the world's largest gas producer to 51% from its existing 38%.

Not least, the deal will enable Moscow to assume control over expected increases of natural gas exports to the Asia-Pacific area through acquisition of Rosneft's Far East interests—especially in the Sakhalin venture blocks.

Rosneft-Sakhalinmorneftegaz remains the largest oil production enterprise in Russia's Far East, according to a company statement, providing Rosneft with 10% of its produced oil and 30% of its gas.

Russia's Minister for Industry and Energy Viktor Khristenko said state officials and heads of both Gazprom and Rosneft had approved the merger, which should be completed by June.

The government did not release details of the agreement, but a Gazprom spokesman said the two companies would be merged under terms announced earlier this year.

Under those terms, the merger of Rosneft into Gazprom will likely exclude Yuganskneftegas, the main production unit of OAO Yukos which Rosneft acquired last year, leaving it as a stand-alone firm.

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