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Russian government to control Gazprom

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by Brian Turner
Russian government to control Gazprom

Gazprom, the Russian natural gas monopoly, has announced that the Russian government will increase its holdings in the company from 38 percent to 51 percent.

Russia will acquire the shares on the open market and will pay cash for them.

This move makes it unlikely that a planned merger between Gazprom and Rosneft, the state run oil company, would proceed as planned.

However, if the merger does not proceed, it is considered likely that Gazprom will try to acquire another Russian oil company, possibly Sibneft.

It is also likely that the move by the Russian government will result in an end to the ban on foreign ownership of Gazprom shares.

The economic ministry said that it would borrow from international banks to raise the cash for the transaction, but there was some speculation that the money might be raised by selling part of oil producer Yuganskneftegaz, recently acquired by Rosneft, to China.

That acquisition tripled Rosneft’s oil production but served to complicate matters involved in the merger with Gazprom.

China’s National Oil Corporation is said to be in the market for new oil sources.

All this news had Gazprom shares up 2.8 percent to Rbs76 in late trading in Moscow.

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News posted: May 17, 2005

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