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WSJ reports that Russia is exploring a plan to merge Rosneft, a Gazprom subsidiary, and Lukoil.

November 9, 2024

The Wall Street Journal reported that Russia is working on plans to merge Rosneft oil, a state-backed company, with Gazprom, creating the second-largest crude oil producer in the world.

The newspaper reported that executives and government officials have been in talks over the last few months. A deal could or might not be reached, it said, citing unidentified sources familiar with the issue.

The report said that a combination of Rosneft with Gazprom Neft - a subsidiary owned by Gazprom and Lukoil - would rank second only to Saudi Arabia's Aramco, and could pump nearly three times the output of U.S. oil company Exxon.

The report stated that there are a number of obstacles including the opposition of some Rosneft executives and the difficulty in collecting funds for the payment to Lukoil shareholders.

Gazprom, Rosneft and the Kremlin didn't immediately respond to comments, while Lukoil was not immediately available.

The Journal reported that a Rosneft spokeswoman said the report was inaccurate but declined to answer questions. A Lukoil spokesperson told the paper the company and its shareholders weren't in merger negotiations with "any parties" as it would not have been in their best interest.

A Kremlin spokeswoman was quoted in the newspaper as saying that the administration did not know about a deal.

The Kremlin stated last month that it was unable to confirm a report stating that Russia's Energy Minister had proposed a nationalisation of the energy sector.

According to an unnamed source, the Telegram app channel EJ reported that Energy minister Sergei Tsivilev suggested that President Vladimir Putin, at a meeting held in the Kremlin, nationalise the energy sector, which is a major provider of income for the government. (Reporting from Gnaneshwarrajan in Bengaluru, Editing by William Mallard.)

(source: Reuters)

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