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. Last Updated: 07/27/2016

Putin Merges Shippers into $5Bln Giant

Itar-TassPresident Vladimir Putin meeting with Sovcomflot chief Sergei Frank at his Novo-Ogaryovo residence Wednesday.
President Vladimir Putin has signed a decree merging the country's top energy shippers in a move to create a $5 billion national shipping giant and help develop the country's huge offshore oil and gas projects.

"You know that I have signed a decree forming a new company on the basis of the two existing ones -- Sovcomflot and Novoship," Putin told Sovcomflot's chief, Sergei Frank, RIA-Novosti reported.

Russia has been seeking to merge Sovcomflot and Novoship for several years, in line with the Kremlin's strategy of enhancing control over the strategic energy sector by creating mighty state giants.

"In the context of consolidation of the two companies a tanker company is being created that will be certainly ranked among the world's five top tanker firms," Frank told Putin.

Frank, a former transportation minister, said the united company would have total assets of close to $5 billion. He said that the company might go public in the future but did not give other details.

State-owned Sovcomflot has a fleet operating 52 vessels with a total deadweight capacity of 4.16 million metric tons.

Novoship, or Novorossiisk Shipping, in which Russia has a majority stake, has 60 vessels with a total deadweight capacity of around 3.7 million tons.

Sovcomflot already serves the ExxonMobil-led Sakhalin-1 offshore oil project and operates Rosneft's Belokamenka floating storage facility near Murmansk.

In January, the Rosneft and Sovcomflot set up a joint venture to serve Rosneft's offshore projects.

"Consolidation of the two companies' resources will ensure more reliable support for serious projects on the Russian continental shelf in future transportation of liquefied natural gas," Frank said.

The merger comes amid rumors that Russia would split the rights to develop new offshore oil and gas fields between Rosneft and Gazprom, further limiting the access of private and foreign firms to energy resources.