GAZPROM MAY BECOME THE LARGEST OIL COMPANY IN THE WORLD

MOSCOW, Dec 1 (RIA Novosti) - On Tuesday, Gazprom made public its plans to establish the largest oil and natural gas company in Russia and in the world through Sergei Bogdanchikov, chief of its subsidiary Gazpromneft. According to these plans, Gazpromneft may take over Yuganskneftegaz, Sibneft and Surgutneftegaz, Gazeta writes. Gazprom's board of directors, Mr. Bogdanchikov said, has accepted a proposal made by Deutsche Bank, Gazpromneft's strategy adviser, which promotes the company's development by acquiring majors like Sibneft, Surgutneftegaz and Yuganskneftegaz. "As Rosneft's integration into Gazprom's structure has coincided with the Yuganskneftegaz sale (77% of the shares), it would be logical to use this opportunity," he said.

Experts doubt that establishing such a giant in Russia is economically advisable. "Major state-run companies are managed less efficiently than private ones, and enlargement does not mean improvement," said Maxim Shein, an analyst with BrokerCreditService. These plans can only be seen in terms of geopolitical interests. The raw-material factor is one that allows the country to influence the international community. Russia has a lever to influence Europe, as the latter greatly depends on Russian gas supplies. If the world's biggest oil company is established and then controlled by the state, Russia will be able to exert considerable influence on global oil prices.

Moreover, a major oil company will enable the government to regulate the supply of oil products to the domestic market, including for the Defense Ministry.

Considering that Gazprom controls over 80% of Russia's natural gas market, it may be conjectured that it will seek a similar position on the oil market. However, managers at the companies on Gazprom's list prefer not to believe the plans of the gas monopoly. LUKoil and TNK-BP see Gazprom's statements as unrealistic, and have made no comment on them.