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Rosneft link with Gazprom in doubt

/ Source: Financial Times

The controversial acquisition of Yukos oil assets by Rosneft, the state-owned oil company, has raised doubt over Rosneft's merger with Gazprom, the state-controlled gas monopoly, according to those familiar with the deal.

Gazprom was supposed to absorb Rosneft by the end of January to create a giant national energy company controlled by the state.

But observers believe the U.S. court ruling which prohibited Gazprom from participating in the auction for Yuganskneftegas, the main production unit of Yukos, and Rosneft's subsequent purchase of the asset may now prevent the merger deal going ahead.

"Two weeks ago the merger between Gazprom and Rosneft was considered a to be done deal. Now it looks less certain," said Steven Dashevsky, oil and gas analyst at Moscow-based brokerage Aton.

One person familiar with the deal said: "There is no mutual understanding of whether the two companies should merge or if they would better off on their own."

The failure of the merger would be a blow to international investors who have been buying Gazprom shares in anticipation that the deal would encourage the government to raise its stake in Gazprom and then lift the ring fence restricting foreign ownership in the energy group's shares.

Failure of the merger would also reveal the strength and independence of Siloviki, a faction in the Kremlin made up of former security services members who initiated the attack on Yukos and are believed to have links with Rosneft.

Rosneft is run by Sergei Bogdanchikov an enemy of Mikhail Khodorkovsky, jailed owner of Yukos and is chaired by Igor Sechin, a secretive and powerful deputy head of the Kremlin administration who is believed to be one of the main drivers of the attack on Yukos.

A merger of Rosneft with Gazprom could deprive both men of their independence. Mr. Bogdanchikov has argued in the past that the government should retain a direct control over Ronseft, but he was overruled by Gazprom. That may now have changed after Gazprom was forced to pull out from the auction for Yuganskneftegas following the U.S. court injunction.

Rosneft, which has no exposure to the US market, bought the stake through a front company.

On Wednesday Gazprom said it had bought Rosneft's share in some of the offshore gas projects which have international potential.