Interfax-Ukraine SOCHI, Russia — Russian gas giant Gazprom and Ukraine’s national oil company Naftogaz Ukrainy, along with the two countries’ energy ministries, will discuss the potential for the two companies’ unification after the May holidays, Gazprom CEO Alexei Miller told reporters after Russian-Ukrainian talks in Sochi on Friday.
“The Russian and Ukrainian energy ministers, Sergei Shmatko and Yuriy Boiko, Naftogaz head Yevhen Bakulin and I will meet immediately after the May holidays in Moscow to discuss this,” Miller said.
“We will discuss a possible asset swap, but in essence this involves a merger of the companies,” he said.
Gazprom has transacted a number of asset swaps with its partners in Germany and Italy, Miller said. Ukraine has considerable production, transportation and underground storage assets. “Gazprom also has very substantial assets,” Miller said.
Ukraine would receive access to Russian gas reserves. “We have huge reserves. There is enough gas for everyone in the 21st century,” he said.
Russia for its part will invest in production and Ukraine’s gas transportation system.
“We of course will be interested in investing in Ukraine’s gas transportation system. We are uniting and therefore are interested in investment in both production resources and gas transportation system resources,” he said.
With all due respect to Mr Miller, the examples cited from Italy and Germany do not relate soley to the State owned companies in either nation but to smaller privately owned domestic suppliers……..similar to Odessagaz.
Whilst there is a desperate need to solve issues within Naftogaz Ukraine, it is not going to be acceptible to the majority of Ukrainians……..particularly on the back of the RBSF deal……unless the public pay the same rediculously low rate for gas as those in Russia for consumption.
My gas bill when I lived in Moscow, if I had every gas buring appliance working all day every day all year, would still have been less than 2 months of sparing use in the UK.
It will take similar domestic gas usage pricing to allow for the public to get over such a significant move as Naftogaz and Gazprom merging…….albeit I can see obvious positives for Naftogaz Ukraine with regards to exploration in Ukraine and modernisation of the GTS.
There would be quite a few nations around the world who would be willing to merge with Gazprom when all is said and done…….but they do not have the political climate or history of Ukraine and Russia.
I am not certain which holidays are being spoken of, as this weekend is a holiday for Labour Day and next weekend it the great Patriotic War holiday and most politicians are taking the time off in between.
I hope this meeting will take place after 10th May, allowing time for cooler heads and dispassionate thought to prevail over knee-jerk reaction………particularly if this merger is agreed, there will be no due diligence with regards to balance sheets and assets…….only over the legal wording and power sturcture behind the merger as to who controls what and how…….so it will be a very fast merger indeed.
Quite how it is possible to merge a Russian State owned entity and a Ukrainian State owned entity is a little beyond my comprehension……after all they are State owned by two sovereign States and not two priavte companies.
Asset swaps of course do make his easier, but what will Ukraine get for its hard GTS asset?
I hope discretion becomes the better part of valour here and some considerable time is spent working through this potential deal. I am not saying it will be a bad deal for either company but there are political ramifications for both sides…….as not everyone in Russia considers the RBSF deal a good deal for Russia due to $40 billion in gas aid and $100 million per year cash for 25 years being quite a high price to pay.
This is one to watch with interest……..and it will be very interesting to see if the EU will do anything…….although it is unlikely considering existing Gazprom asset swaps in Germany and Italy having already been accomplished a few years ago.