Russia's oil giant merger: Kremlin remains silent on reports
Russia plans to merge its three largest oil companies into a single giant, reports the "Wall Street Journal." This operation is expected to create the second-largest oil company in the world. Kremlin representatives do not confirm this information.
Russia is considering a plan to merge its three largest oil companies into a single giant, as reported by the "Wall Street Journal." As part of the merger, the state-run Rosneft would take over Gazprom Neft, which is part of Gazprom, and Lukoil. The new company would become the second-largest oil producer in the world, just behind Saudi Aramco, producing nearly three times as much as Exxon Mobil. As a result, Russia could potentially demand higher prices from customers in India and China.
A new weapon in global negotiations
The Russian economy largely relies on oil and gas revenues, which account for about one-third of the federal budget. Russia owes its success in maintaining economic stability despite Western sanctions primarily to its strong oil sector, reports the Wall Street Journal. Sources say Moscow hopes the merger will allow for more effective counteraction against sanction pressures, which hinder exports, delay new projects, and complicate financial settlements. Thus, it is supposed to be a new negotiating weapon for Putin and the Kremlin.
Sources cited in the WSJ report explain that merger talks are also intended to prepare Russia for a potential warming of economic relations with Western countries after the conflict in Ukraine ends.
Company authorities deny
Representatives of Rosneft stated that this information is false. Lukoil informed the newspaper that neither the management nor the shareholders have engaged in merger talks. Comments from either Gazprom Neft or Gazprom were unavailable, while the Kremlin indicated a lack of information on this matter.
Income from the oil and gas sector for the Russian federal budget decreased in October 2024 compared to the same period in the previous year. The main reason cited was the drop in oil prices. In October, the price of a barrel of Urals oil was $63.57, whereas a year earlier it was $83.18, indicating a nearly 30% drop. Consequently, revenues from the mineral extraction tax (MET) decreased by 200 billion rubles ($2 billion), and from the additional income tax (ATT) by 100 billion rubles ($1 billion) compared to the previous year.
