The merger operation, expected to take place in stages, is aimed at „forming a single network of oil and oil products via the pipelines and protecting the economic interests of the Russian federation,” according to the text. The process will start with the total privatization of Transnefteprodukt and an increase in the capital of Transneft, which is quoted on the stock exchange and 75% owned by the state. The process will end with a share swap against new Transneft shares. The Russian state’s share in the new entity will be unchanged at 75%, plus one share.
Transnefteprodukt, which controls around 19,000 kilometer of pipeline in former Soviet countries like Kazakhstan, Ukraine and Belarus is currently 100% owned by the Russian state. According to its internet site, it employs 15,700 people and its main customers are Gazprom Neft, Yukos and Lukoil. Transneft owns more than 43,000 kilometer of pipeline and carries 93% of the oil produced in the country. It is partly quoted on the stock exchange, while the Russian state holds all the voting rights in the company. (hemscott.com)
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