Russia to ‘merge three oil companies’ to boost war effort

Russia is seeking to merge three major oil companies in a bid to create the world’s second-biggest crude oil producer, reports suggest.

The combination of state-backed Rosneft Oil, Gazprom Neft and privately-owned Lukoil would be second to Saudi Arabia’s Aramco and pump almost three times US oil producer Exxon’s output, according to the Wall Street Journal.

The talks underline Vladimir Putin’s desire to muster the energy sector to support his war effort, people familiar with the talks said.

The Russian president, some of them said, envisions a juggernaut able to compete with Saudi Arabia at a time when oil demand, while still enormous, is slowing in the face of greener alternatives.

Oil and gas are the lifeblood of Russia’s economy, supplying almost a third of federal revenue and handing Putin influence around the world.

Russia’s success at stabilising its economy in the face of Western sanctions is in large part thanks to its oil industry.

The talks, while influenced by the war in Ukraine, are also meant to prepare Russia for an eventual postwar thawing in economic relations.

There are some obstacles, including opposition from some Rosneft and Lukoil executives and the problem of collecting funds to pay Lukoil shareholders, the report added.

The same newspaper quoted a Rosneft spokesperson as saying the report was incorrect but declining to answer questions.

A Lukoil spokesperson said neither the company nor its shareholders were in merger negotiations “with any parties, as this would not be in the interest of the company”. A Kremlin spokesperson said Moscow had no knowledge of the deal.