Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Ministers: Gazprom Merger Is On Track

Gas monopoly Gazprom's merger with state oil firm Rosneft, approved by President Vladimir Putin in September, may be completed in the first half of 2005, Industry and Energy Minister Viktor Khristenko said Friday.

"The working groups are continuing to work out the plan. They say they will need one more month or probably a bit more. I hope this work will be limited to the first half [of 2005]," Khristenko told reporters.

"I think the structure and the quality of this deal is much more important than the time frame," Khristenko added.

But Economic Development and Trade Minister German Gref said the details of the merger deal would be decided by the government at meetings this week.

"We plan to determine all the mechanisms of the deal next week," Gref said at meeting in his ministry Friday.

The state wants to merge its 100 percent holding in Rosneft into Gazprom to boost the government's control in the world's largest gas producer to 51 percent from around 39 percent at the moment.

On Thursday, the head of Gazexport, Gazprom's export wing, said that the merger with Rosneft could be legally tied up in May.

"I don't want to be too optimistic or pessimistic, but probably it will take a period of between one and two months," Alexander Medvedev said. "The principle scheme is already at a rather advanced stage."

Gazprom CEO Alexei Miller announced earlier this month that the merger would be concluded in June. The same day, however, Rosneft issued a statement saying that it would remain an independent company and would retain control of its assets.

The confusion mounted when Rosneft issued a late retraction of the statement as a "technical mistake."

While he said that the Rosneft statement had not been authorized by Rosneft chief Sergei Bogdanchikov, Medvedev said that managers were to blame for the snafu, though ultimately the merger would be pushed ahead by the state.

The deal, the biggest corporate merger in Russian history, is a precondition to the scrapping of curbs -- the so-called ring fence -- on foreign ownership of Gazprom shares, on which global funds have bet billions of dollars.

Foreigners are now only allowed to trade a small issue of London-listed proxy shares -- although many investors have got round the "ring fence" by buying into structured investment vehicles offering exposure to cheaper local stock.

The deal has been delayed by a Kremlin power struggle over control of Russia's energy riches amid fighting among various factions over the control of Yuganskneftegaz, the key unit of stricken oil company Yukos, which the government sold in December to settle Yukos' back tax bills.

Rosneft has ended up buying Yugansk, which produces 1 percent of the world's oil, for $9.4 billion, and has made it clear it wants to remain independent.

(Reuters, AP)