Ukraine Rules Out Gas Merger with Russia
Ukrainian Prime Minister Mykola Azarov ruled out a merger between Russian energy giant Gazprom and Ukraine's national oil and gas company Naftogaz Ukrayiny.
The idea of merging both energy companies was touted in late April by Russian Prime Minister Vladimir Putin.
Gazprom CEO Alexei Miller said at the time that both companies should seek the merger through joint ventures as the first step towards consolidation. He also said that Russia could contribute deposits, while Ukraine could contribute its gas transportation system.
"These are good deposits. If these deposits are used as the basis for a joint venture and an asset swap, I believe we'll be able to agree," Azarov told RIA Novosti news agency.
The governments are seeking to create the venture between their respective gas monopolies, by year-end, Azarov said.
Ukraine is reportedly willing to give Russia joint control of a pipeline to southeastern Europe in exchange for access to natural gas supplies.
The proposed venture would allow Russia to upgrade the pipeline that supplies the Balkan region, eliminating the need for the proposed South Stream project to bypass Ukraine.
Upgrading the southern pipeline link to the Balkan region “is a very promising project,” Azarov said. This “will allow Russia to transit fuel reliably to Bulgaria and to implement the South Stream project, only on our territory,” he said.
The project would be “mutually profitable” and provide Ukraine with “transit guarantees.” Transit guarantees are critical for Ukraine, which ships about 80 percent of Russia’s gas exports to Europe through its pipelines.
Russia is planning several pipelines bypassing Ukraine, including Nord Stream, which is being built across the Baltic Sea, and South Stream across the Black Sea. The links may lower volumes crossing Ukraine.
Azarov explained why the two companies could not merge.
"The merger in conditions when the companies have incompatible capitalization or, to be more exact, incomparable with each other is called a takeover rather than a merger. No country possessing such a prize asset as its gas transportation system, its gas and oil refining capacities would agree to such a merger," he said.
Russia had said it would drastically reduce its export gas price for Ukraine, if Gazprom were allowed to merge with Naftogaz.