Gazprom steps up Naftogaz merger offer

Gazprom chief executive Alexei Miller has stated, that merger of the Russian gas monopoly Gazprom and Ukraine's Naftogaz Ukrainy, is "a historically predetermined step."

In a bid to sweeten the deal, Gazprom has offered Ukraine specific gas fields with reserves of up to 1 trillion cubic meters if Naftogaz Ukrainy agrees to contribute its gas assets to their joint venture, said Miller.

Ukraine's households — hit hard by the local economy's 15 percent drop last year — would continue to pay “subsidized regulated prices” for gas if the merger materialized, he said.

The proposed merger would allow Gazprom direct control of the approximate 80 percent of its gas supplies to Europe, which pass through Ukraine.

Recent disputes with Ukraine and Belarus, over prices for the fuel and transit costs have led to cutoffs to European customers. Greater Gazprom control could only be viewed ominously by those seeking a way of reducing European energy dependence on Russian sources.

A merger of the companies was proposed by Prime Minister Vladimir Putin on April 30, 2010.  The proposal was not initially received well by the Ukraine, as Naftogaz is just 6 percent the size of Gazprom in terms of sales last year.

Ukrainian President Viktor Yanukovych and his government have said the merger would be impossible unless Kiev and Moscow had equal weight in the final holding.

Miller suggested that Moscow was prepared to offer additional perks to make an eventual merger more palatable to Kiev.

Yanukovych's opponents, including former President Viktor Yushchenko and his prime minister, Yulia Tymoshenko, have been vocal opponents of any deal giving Russia influence over the country's gas infrastructure.

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