Saturday, September 11, 2010

Ukraine Denies Naftogaz-Gazprom Merger

Gazprom CEO Alexei Miller and Ukrainian Energy and Fuel Minister Yuriy Boyko have held talks on creating a joint venture between the ailing Ukrainian natural gas company Naftogaz and Gazprom. At the end of August, a Gazprom spokesman said talks were at an advanced stage, and CEO Miller told the press that the merger would lead to a fall in the price of gas for the average Ukrainian household (The St. Petersburg Times, 31 August 2010). Minister Boyko subsequently ruled out a merger, stating that Ukrainian President Viktor Yanukovych would only authorize a merger on an equal footing and in light of the country's national interests (Oil and Gas Eurasia, 08 September 2010).

The merger talks may have been scuttled in light of the appearance of a White Knight, German Chancellor Angela Merkel. Yanukovych had previously proposed the creation of an international consortium to modernize the pipeline system in the Ukraine, through which 80% of Russian gas sales to Europe has to pass. The European Union had signed an agreement to begin modernization, but there had been no follow-up. According to, however, Chancellor Merkel has stepped forward and stated that Germany is prepared to invest in the reconstruction of the Ukrainian gas transport system (Oil and Gas Eurasia, 31 August 2010).

Ukraine is not interested in being solely a transport country, however, Minister Boyko says the country is actively engaged in attracting partners to develop gas fields on the shelf of the Black and Azov seas. Boyko said he was seeking international partners in light of the expense and risk of the development projects (Oil and Gas Eurasia, 10 September 2010).

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