Managers' row hits Russian merger

Could Gazprom's confidence about the merger have been misplaced?

A row is brewing between the chiefs of two state-controlled Russian energy firms, throwing the shape of a planned merger into confusion.

On Wednesday, the head of gas giant Gazprom said the merger with Rosneft was ready to go ahead - but would exclude its recent purchase Yugansk.

But 24 hours later, Rosneft's boss said his firm would remain independent.

The row follows controversy over Yugansk, seized from oil giant Yukos and sold to Rosneft in December.

Gazprom had originally been expected to buy Yugansk, but feared the repercussions of a US bankruptcy court decision to ban the sale.

A little-known shell company called Baikal bought it instead.

Rosneft - itself wholly state-owned - then snapped up Baikal, incurring a debt of some $9.6bn (£5.03bn).

The deal announced was very pragmatic Stephen O'Sullivan, UBG

Given that Rosneft and Gazprom were already scheduled to merge, ultimate control of Yugansk looked set to pass to Gazprom in any case.

Done deal?

A statement on Wednesday had seemed to confirm that the merger's terms had been sorted out.

Gazprom chief Alexei Miller appeared on the NTV television channel - which Gazprom owns - with Rosneft chief Sergei Bogdanchikov to confirm the deal.

The big surprise was the announcement that Yugansk would remain an independent unit - albeit one owned by Gazprom - and run by Mr Bogdanchikov.

Then on Thursday - in a move widely seen as a negotiating ploy in an escalating turf war - Rosneft bluntly contradicted what had been outlined.

"(Mr Miller's) statement is not true, and should be considered as the personal opinion of the head of Gazprom," it said.

Tactics

"On Wednesday, the two sounded like it was all agreed, and presumably (President Vladimir) Putin had said this was the way it would be," Stephen O'Sullivan, chief strategist at UBG investment bank, told BBC News.

"The deal announced was very pragmatic. But it seems as if Bogdanchikov may have thought about it overnight and changed his mind."

Rosneft is now saying that it has yet to decide which assets should go to Gazprom and that the plan to split off Yugansk is far from a done deal.

"I think Rosneft is raising the stakes in this fight," said Steven Dashevsky, energy analyst at Moscow brokerage Aton.

Yugansk is a key asset for Gazprom and absorbing both Rosneft and Yugansk would take Gazprom's share of Russian oil output to 20%, far above its current 2.5%.

Merging with Rosneft alone would give it an 8% share.

Yugansk had been auctioned by Russian authorities to help pay off a $27.5bn back-tax bill owed by Yukos.