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Russian state-run natural gas giant Gazprom's CEO Alexei Miller openly mused Oct. 19 that his firm wanted to purchase Zarubezhneft, a state-owned oil firm, from the Russian federal government. Within 24 hours, Zarubezhneft executives were overtly discussing what a great idea it was. Sources within the Kremlin indicate that the merger of the two firms is now simply a matter of ironing out some technicalities.
Gazprom is in the midst of a rapid expansion program in a private quest to become Russia's premier energy company. The purchase of Zarubezhneft will allow it to begin to branch out internationally as well, but doing so will alter the balance of power within the Kremlin.
Gazprom announced Sept. 14 that it had received government approval to take over Rosneft, a fully state-owned oil firm. Now it is after Zarubezhneft as well.
Miller's higher expectations stem from the fact that Gazprom is paying for Rosneft by giving the government the 10.7 percent of its own shares that the firm holds. As of Sept. 14, those shares were worth $5.6 billion, while Rosneft was worth $5 billion. Five weeks later, between the news of the impending Rosneft purchase and Gazprom's likely acquisition of Yuganskneftegaz, a 1 million barrel per day (bpd) oil-producing subsidiary of the beleaguered Yukos, those same Gazprom shares are now worth about $6.3 billion. Miller just wants to make sure he gets his money's worth. Zarubezhneft is worth less than $1 billion.
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