Russian Government holds 51 percent of Gazprom

Gazprom, the Russian natural gas monopoly, has announced that the Russian government will increase its holdings in the company to 51 percent, up from 38 percent.

This news sent Gazprom shares up 2.8 percent to Rbs76 in late trading in Moscow.

The deal makes it unlikely that Gazprom and Rosneft, the oil company run by the state, will merge as had been planned, although it is expected that Gazprom will look elsewhere for an oil producer to buy. One possible merger target is said to be Sibneft.

Russia has said it will buy the shares on the open market for cash. The economic ministry said that it would borrow the money to pay for the purchase from international banks, but there was some speculation that the money might be raised by selling part of oil producer Yuganskneftegaz, recently acquired by Rosneft, to China, which is in the market for new sources of oil.

The acquisition of Yuganskneftegaz by Rosneft tripled its oil production capacity. However, it also complicated the merger with Gazprom.