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30 Apr, 2010 14:33

Gazprom - Naftogaz merger mooted ahead of asset swap talks

Russian Prime Minister, Vladimir Putin has proposed the uniting of Gazprom with Ukraine’s Naftogaz to underpin integration.

Speaking after meeting with Ukrainian counterpart Nikolay Azarov in Sochi  where proposals to merge the two nations nuclear energy sectors were discussed, and where he also signed an order confirming the zero export duty on gas exports to Ukraine, Putin noted gas could ties could also be merged.

“The same could be done in the gas sphere. I propose uniting Gazprom and Naftogaz."

Kiev will examine Moscow’s concrete proposals on uniting of Gazprom with Ukraine’s Naftogaz, as this initiative hasn’t been discussed earlier, announced Ukrainian Prime Minister Nikolay Azarov in Sochi.

“During the talks with my Russian counterpart, the idea of uniting of Ukraine’s Naftogaz and Gazprom wasn’t discussed; Vladimir Putin expressed it off-hand,” the prime minister’s press secretary, Vitaly Lukyanenko, quoted the Ukrainian leader as saying.

The head of Gazprom, Aleksey Miller, said that Russian and Ukrainian energy ministers would discuss the uniting of the two companies in Moscow after the May Day celebrations.

According to Miller, the announcement made by Putin on Friday “elicited applause in the hall.”

“I would say it was a rather positive reaction,” he added.

“No doubt, this is a question that will be an issue in our consultations in the nearest future, and we have agreed that we will meet with Minister Yury Boyko in Moscow right after the May Day celebrations in order to start consultations,” Miller said.

However, the head of Gazprom admitted that the uniting of Gazprom with Ukraine’s Naftogaz requires the development of Ukraine’s gas transportation system.

“Then, we will be interested in investments in the gas transmission component, as we will be working on the entire chain, from extraction to final customer,” he added.

He noted that it is also a question of uniting of companies in the field of extraction. That means, according to Miller, that “Ukraine will get access to our resources.”

“You know that our resources are enormous and we are talking about the fact that there will be enough gas for everybody and in the 21st century there will be no problem with fixing up Ukrainian customers with gas,” he said.

The two prime ministers agreed to examine the possibility of a joint modernization of Ukraine’s gas transportation system, according to Azarov.

“We are a big transit state, which kindly gives the possibility of transit of oil and gas,” he said. “Today we agreed to examine together the possibility of guarantees that these supplies will be planned for many years to come and that we will work hard on the modernization of Ukraine’s gas transportation system.”

Uralsib chief strategist, Chris Weafer, spoke with business RT about what the implications of the move could be.

According to a spokesman for the United Russia party, Dmitry Polikanov, in proposing the deal Russia is attempting to keep up the momentum of improving relations with Ukraine.

“We started with the Black Sea Fleet deal, now we are going to develop cooperation in other areas,” he said. “Of course, it may seem that it is a little hurried, but at the same time Russia is trying to get the opportunities which it had lost over all these years, so now we are speaking about cooperation in the nuclear industry, in the gas industry. Probably tomorrow or the day after tomorrow we will be able to speak about other industries and areas of mutual interest.”