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Last Updated: Wednesday, 28 September 2005, 12:30 GMT 13:30 UK
Gazprom to buy Sibneft for $13bn
Gazprom headquarters in Moscow
Gazprom aims to be a major player in oil as well as gas
Russian gas giant Gazprom has agreed to buy Sibneft oil company, controlled by Roman Abramovich, for $13bn (7.4bn).

Their joint statement said a deal had been struck between state-controlled Gazprom and Millhouse Capital, which owns a majority stake in Sibneft.

Millhouse Capital is an investment vehicle belonging to Mr Abramovich, who also owns Chelsea football club.

Analysts say the deal boosts President Vladimir Putin's efforts to reassert state influence in the energy sector.

Gazprom, the world's biggest natural gas producer, has been back under Russian state control since June, when the Kremlin spent more than $6bn to increase its stake from 38% to 51%.

The move came after Gazprom became embroiled in the Yukos affair and abandoned plans to merge with another oil firm, Rosneft.

Binding deal

The joint statement by Gazprom and Sibneft, Russia's fifth-largest oil company, said Gazprom had signed a binding agreement to buy 72.663% of Sibneft's shares from Millhouse Capital.

Gazprom already owns 3% of the company.

Earlier this year, Mr Putin's administration had to rethink its plans to merge Gazprom with Rosneft after oil firm Yukos took legal action to prevent its break-up in a battle over unpaid taxes and fines.

The government had wanted to shift the key crude oil production unit of Yukos to Gazprom and then merge the newly enlarged oil and gas group with Rosneft.

Instead, to avoid legal action, it had to sell the division to Rosneft, which needed to borrow heavily to finance the deal.

Analysts also said that managers at both firms had strongly resisted the merger, forcing a major government rethink.

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