Russian authorities plan to merge the country’s three largest oil companies to be able to increasingly circumvent sanctions, The Wall Street Journal reports. Experts doubt that Russia will benefit from such a merger. They believe that the media invented the story to increase tension in relations with India, which, after the start of the SVO, became the second largest consumer of Russian oil.
Moscow plans to merge Rosneft, Gazprom Neft and Lukoil and create a mega-producer. The Wall Street Journal reports this.
“As a result, the company will easily become the world’s second-largest oil producer after Saudi Aramco, producing almost three times as much as Exxon Mobil.” – write the post.
The Wall Street Journal reports that, according to one of the scenarios, Rosneft will absorb Gazprom Neft and Lukoil. The publication states that negotiations have been taking place between the company’s management and the government for several months.
Among the reasons for the merger is the desire for higher prices from customers. In addition, as The Wall Street Journal writes, the new mega-company will find it easier to evade sanctions. At the same time, the Lukoil division based in the United Arab Emirates could become the seller of all the oil.
Russian companies told the publication that the information was not true and that the Kremlin was not aware of such plans.
Experts doubt the viability of the merger.
“The Russian state does not need this. First of all, the acquisition, from a purely technical point of view, will require a lot of money. Lukoil is a private company and one of the largest oil producers in Russia. Naturally, these are tens of billions of dollars. And Rosneft does not have that amount of money in its accounts at the moment.” — says the main analyst of the FNEB and expert of the Financial University of the Russian Government Igor Yushkov.
For this type of transaction, as a rule, external financing is attracted, he notes.
“By purchasing TNK-BP, Rosneft attracted funds from many banks around the world. Now the Western credit markets are closed to us and the Chinese banks grant at a high interest rate… And you can’t get that kind of money from them. Nor can you borrow from the State from the National Social Welfare Fund, because it does not have time for that,” considers the expert.
It makes no sense to merge with a strong company because its director becomes a powerful hardware manufacturer, continues Igor Yushkov.
“It is no secret that even now the heads of large Russian oil companies can compete with ministers and deputy prime ministers in terms of lobbying apparatus and weight. And the director of the new company, say, will become even more excessively powerful. Third, there is the problem of antitrust legislation. Our industry is already very consolidated and they are asking us for it even more, which could have direct consequences for the country’s consumers.” – considers the main analyst of the FNEB.
Experts suggest that The Wall Street Journal’s publication is a hoax intended to create conflict both at home and abroad.
“On the one hand, try to create a conflict within Russia’s political and economic elites, so that someone is afraid that the state may begin to redistribute property. On the other hand, this is probably an attempt to drive a wedge between Russia and India in the first place. We have a long-standing partnership with China, but for India we only become the top oil seller from 2022. And they can try to fight us by saying that Russia will create a major exporter to inflate their oil prices, and India will lose cheap raw materials. The logic of the publication may be that Russia can harm India by taking advantage of what is now the main supplier.” – says Igor Yushkov.
At the same time, India is one of the first places for Russia, the expert notes: “Together with China, they consume more than 90% of imported oil. And for us it is important to preserve this market.”
Chief strategist of the investment company “Vector Capital” Maxim Judalov suggests that becoming a monopolist means exposing oneself to simpler sanctions pressures under conditions in which it is already clear that sanctions will be the main instrument of US foreign policy.
“It is easier to avoid sanctions when there are many schemes, merchants and delivery people. That is, when you blur all kinds of structures. And when a large company is created, it will be easier for Western regulators to detect all these chains to avoid sanctions and similar schemes,” agrees Igor Yushkov.
“At the same time, the growth of the merged company’s bargaining power is also in doubt. After all, if you do not have the opportunity to supply at the market price, then due to sanctions it will be easier to put pressure on you.” – adds Maxim Khudalov.
