Russian oil giant: Kremlin considers major industry shake-up
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 have not confirmed this information.
Russia is contemplating a plan to merge its three largest oil companies into a single conglomerate, as reported by the "Wall Street Journal." As part of the merger, the state-run Rosneft would absorb Gazprom Neft, which is part of Gazprom, and Lukoil. The newly formed company would become the second-largest oil producer in the world, second only to Saudi Aramco, producing nearly three times as much as Exxon Mobil. Consequently, 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 robust oil sector, reports the "Wall Street Journal." Sources indicate that Moscow hopes the merger will allow for more effective resistance against sanction pressures, which hinder exports, delay new projects, and complicate financial transactions. Thus, this is intended to be a new negotiating tool for Putin and the Kremlin.
Sources cited in the " WSJ " report explain that merger discussions also aim to prepare Russia for a possible warming of economic relations with Western countries after the conflict in Ukraine concludes.
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 discussions. Positions from either Gazprom Neft or Gazprom could not be obtained, while the Kremlin indicated a lack of information on this matter.
The 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 £49, whereas a year earlier it was £64, indicating a nearly 30% drop. Consequently, revenues from the mineral extraction tax (MET) decreased by £1.6 billion, and from the additional income tax (ATT) by £790 million compared to the previous year.
