Russia's potential oil merger: A power play for global influence
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. This consolidation could potentially allow Russia to 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 attributes its economic stability amid Western sanctions largely to its robust oil sector, reports the "Wall Street Journal." Sources say that Moscow hopes the merger will enable more effective resistance against sanction pressures, which hinder exports, delay new projects, and complicate financial transactions. Thus, it is envisioned as a new negotiating tool for Putin and the Kremlin.
According to sources cited in the WSJ report, merger discussions are also intended to prepare Russia for a potential warming of economic relations with Western countries once 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. Comments from Gazprom Neft or Gazprom could not be obtained, while the Kremlin indicated a lack of information on the matter.
Revenue from the oil and gas sector in 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 CAD 88, while a year earlier it was CAD 116, indicating a nearly 30% decrease. Consequently, revenues from the mineral extraction tax (MET) decreased by CAD 2.8 billion and from the additional income tax (AIT) by CAD 1.4 billion compared to the previous year.
