Planned mergers of Russian oil giants
According to one of the discussed scenarios Rosneft Oil would take over state producer Gazprom Nefta subsidiary of natural gas exporter Gazprom, and an independent one Lukoil – said the American daily, citing “people familiar with the matter”. All three companies are subject to US sanctions.
The giant resulting from these acquisitions would produce three times more oil than the largest American producer, Exxon Mobil. The change would make it easier to “extract higher prices from customers in places like India and China,” WSJ said.
Obstacles to potential mergers in Russia
Speculation about mergers and acquisitions in the Russian energy sector appears from time to time, but no large transactions have occurred in the last decade. The potential merger is hindered both by the protests of some directors of Rosneft and Lukoil, but also by the need to raise funds for payments to Lukoil’s shareholders, the daily wrote.
Rosneft’s spokesman said that the American daily’s reports were not true. In a letter sent to the editorial office, he stated that journalists may want to influence the market with this text. A spokesman for Lukoil said that neither the company nor its shareholders are negotiating a merger “with any of the parties because it would not be in the company’s interest.” Spokespeople for Gazprom Neft and Gazprom did not respond to requests for comment.
The impact of the merger on the energy sector and Russian politics
The newspaper’s interlocutors believe that a possible merger would mobilize the energy sector to support the war effort. Oil and gas provide Russia with nearly one third of its budget revenues and strengthen Moscow’s international influence. Russia’s success in stabilizing its economy in the face of Western sanctions is largely due to its oil industry, emphasized “WSJ”.
Taking Lukoil under direct state control would be a big step towards completely ending the privatization of Russia’s mineral resources after the collapse of the Soviet Union, the daily said.
Historical and political context
When Putin came to power a quarter of a century ago, he ruthlessly reorganized the fragmented post-Soviet oil industry, arresting oligarchs and redistributing power to his allies. The remaining handful of players retain varying degrees of independence from the government, but all are perceived as susceptible to the Kremlin’s wishes, WSJ recalled.
For Putin, the merger of oil companies carries risks. The existence of several companies prevents one boss from gaining too much power, the daily noted. (PAP)
