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Putin stuns Ukraine with surprise gas deal
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Putin stuns Ukraine with surprise gas deal
Daria Korsunskaya
SOCHI, Russia
Fri Apr 30, 2010 4:40pm EDT
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Russian Prime Minister Vladimir Putin (C), his Ukrainian counterpart Mykola Azarov (L) and Gazprom Chairman Alexei Miller walk after talks at Russia's Black Sea resort of Sochi, April 30, 2010.
Credit: Reuters/RIA Novosti/Pool/Alexei Druzhinin
SOCHI, Russia (Reuters) - Russia offered on Friday to merge gas giant Gazprom with Ukraine's state energy firm Naftogaz, to a furious outcry from Ukraine's opposition accusing Moscow of trying to destroy Ukraine's independence.
World | Russia
Since the election in February of Kremlin ally Viktor Yanukovich as Ukraine's president, ties with Moscow have rapidly improved with accords on gas pricing and a lease extension for a key Russian naval base in Ukraine's Crimea.
But Prime Minister Vladimir Putin's proposal was Russia's boldest move yet and would allow Moscow to control its gas transit to Europe. Ukraine's opposition leader Yulia Tymoshenko said the deal was part of "a plan to destroy Ukraine."
"It is not a merger based on partnership but Russia's full acquisition of Ukraine," Tymoshenko said in a statement posted on her party's website. "The Crimea was just the beginning."
The deal would at a stroke give Moscow control of the major gas pipelines which run through Ukraine to supply Europe, as well as a lockhold over Ukrainian domestic gas supplies.
Owned by the state, Naftogaz is the exclusive importer of Russian gas into Ukraine and about 20 percent of the EU's gas needs flow through its pipelines.
Naftogaz's finances have crumbled as it buys gas from Russia at expensive prices and is then forced to sell it at subsidised prices to Ukrainian consumers.
The Gazprom-Naftogaz merger proposal came at a meeting in Russia's Black Sea resort of Sochi of the Russia-Ukraine inter-governmental commission.
NUCLEAR COOPERATION
The head of Russia's state nuclear corporation, Sergei Kiriyenko, had earlier said both countries were considering creating a joint venture to implement nuclear power projects.
"We spoke about integration in the nuclear sphere. We are ready to do the same in gas. I propose to merge Gazprom and Naftogaz of Ukraine," Putin told the meeting.
A spokesman for Ukraine's premier described Putin's comments as "impromptu," Interfax reported, but gas industry sources said the proposal was serious and not an off-the-cuff remark.
"Ukraine's Prime Minister Mykola Azarov states that the idea to merge (Naftogaz) and Gazprom was not discussed and not even raised (at the meeting)," Interfax Ukraine quoted spokesman Vitaly Lukyanenko as saying.
"The idea expressed by the Russian prime minister was impromptu. So, we will discuss impromptu proposals and look into concrete proposals," he said.
Putin's spokesman Dmitry Peskov told Reuters the deal would most likely take form of an equity swap between the two firms, with Ukraine possibly exchanging its 100 percent holding in Naftogaz for a corresponding stake in Gazprom.
"We are talking about a creation of a single company," Peskov said, dismissing talk that the proposal was "impromptu."
"It (the proposal) was not an impromptu one. It was a thought-out, calculated proposal. Such proposals are not made in an impromptu way," Peskov said. He added that Russia's plans to diversify gas supplies to Europe remained on track.
Gazprom spokesman Sergei Kupriyanov told Reuters Putin's offer was "interesting" and Gazprom was ready "to work on it."
"Obviously, the synergy effect is there, we will see how it is implemented," he said. Gazprom shares fell 2.5 percent to 170 roubles after the news, and some analysts were skeptical.
Chris Weafer, chief strategist at Russian brokerage Uralsib, said it would be "an impossible merger."
"I think that the two companies are different animals in terms of size and transparency," he said. "I don't think that Ukraine would agree to a merger."
Medley Global Advisors' analyst Douglas Busvine said valuing Naftogaz, which is not a public company, does not disclose its financials and had restructured its debt last year, would be difficult.
"Naftogaz is not viable as a going concern but they have some assets that are worth something," he said. Peskov suggested that as Russia diversifies its supplies routes the value of Naftogaz assets is set to decrease.
Weafer said Gazprom's size meant it would completely dominate any joint company. "And that would be unacceptable to the Ukrainian public," he added.
The fiery opposition leader Tymoshenko called for the creation of a "committee to save Ukraine." She called for mass protest rallies starting May 11 to depose Yanukovich.
Gazprom's CEO Alexei Miller said the firm was ready to consider an asset swap with Naftogaz in business segments ranging from exploration to sales. "In reality, that's the question of a merger of the two companies," he said.
(Additional reporting by Lidia Kelly, Vladimir Soldatkin, Gleb Bryanski, writing by Michael Stott and Dmitry Solovyov, editing by William Hardy)
World
Russia
Comments
See All Comments (3) | Post Comment
Apr 30, 2010 3:07pm EDT
One day this maniac KGB lieutenant Putin will drop dead, just like everybody else does. He has so much blood on his hands. His Gazprom is ever bankrupt, his Russia is rotten inside country where there is Moscow and there is mind blogging poverty for the rest. The mass protests are spreading all over West to East.
And yet before he does he wants to swallow Ukraine, to make 46 million more people “russian citizens”, infuse his army with Ukrainian boys to fight in Chechnya and other freedom-fighting movements, rob Ukraine of natural reserves and industry, control Black Sea, deteriorate Ukraine with new old Stalinist politics. Next – Poland, he is working on it…
How much longer can this man live? Another 30 years? Russia is the weakest it has ever been – the more so, the more aggressive it’s politics are. We are looking at another disaster! The USA and EU are turning blind eye, pretending nothing is happening. Where do they think he will stop? Do they hope he will stop right before their doors?
nemovich
Report As Abusive
Apr 30, 2010 4:22pm EDT
This comment is extremely stupid. Russia is much richer now than ten years ago, also much more stable and powerful. And the Russians are much more optimistic than the Americans – and for good reason. And this is great!
Heretic1
Report As Abusive
Apr 30, 2010 4:34pm EDT
This comment is nothing but a gross insult of Russia and its leadership, VladimirPutin is not a “mad KGB lieutenant” (colonel, by the way) but a great statesman who saved his country from desintegration and destruction. Guys, have some decency!
Heretic1
Report As Abusive
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