by Henry Meyer
MOSCOW, Sept 14 (AFP) - Russia moved to bolster its role in the strategic energy sector Tuesday as gas giant Gazprom said it would acquire state oil firm Rosneft, handing the government control of the world's largest gas producer.
At a televised meeting with President Vladimir Putin, Prime Minister Mikhail Fradkov said the government, Gazprom's single largest shareholder, backed the proposed deal.
"These are proposals linked to the need to establish conditions for the liberalisation of Gazprom shares and to maintain effective state control over this industry and this major global company," Fradkov said.
The Russian state currently owns around 38 percent of Gazprom directly, a stake that will rise just above the 50-percent threshold as a result of the Rosneft transaction, according to Gazprom.
Gazprom chief executive Alexei Miller said the gas behemoth would take over number seven oil producer Rosneft through a share-swap deal.
"Rosneft will effectively become a subsidiary of Gazprom," Miller was quoted as saying by the RIA-Novosti news agency.
Miller also said that a ring fence that currently limits foreigners' ownership of Gazprom would be abolished, establishing a common share ownership structure for both foreign and Russian investors.
"We are moving towards the merger of these two markets. The first step towards this is the state acquiring a controlling stake in Gazprom," he added.
Gazprom is the world's largest gas producer with 20 percent of production, and owns 60 percent of the planet's known gas reserves.
Since Putin came to power in late 1999, the state has slowly clawed back control of the powerful company, which accounts for eight percent of Russian gross domestic product and was once dubbed a "state within a state."
Analysts said the prospect of an end to restrictions on foreign ownership was highly signficant and should boost the market capitalisation of Gazprom, whose share price shot up by 15 percent Tuesday on the domestic Russian stock market.
Most foreign investors can own Gazprom stock only indirectly, through American Depositary Receipts, although Germany's Ruhrgas has a direct 6.4 percent stake.
According to Russian law, not more than 20 percent of Gazprom can be owned by foreigners.
But the merger of Rosneft and Gazprom also met with scepticism.
"You're welding two government-run companies together, pretty large and not the most efficiently run and that's going to raise questions," said Ron Smith, oil and gas analyst at Renaissance Capital brokerage in Moscow.
Rosneft, which produced 19.4 million tonnes of oil in 2003, owns most of the state oil assets that remained unprivatized after the breakup of the Soviet Union.
Some market watchers believe the government has even grander plans to form a Saudi-style state energy giant by merging the new Gazprom-Rosneft entity with the main production asset of embattled Yukos, Russia's biggest oil producer.
Yukos, the target of an onslaught by fiscal authorities who are claiming more than seven billion dollars (5.7 billion euros) in back taxes, is facing the auction of its core production unit, Yuganskneftegaz.
"Rosneft was seen as the most likely candidate to buy Yuganskneftegaz, so this could potentially mean the creation of a new state oil and gas giant," said Zarko Stefanovski, an analyst at ATON finance house.
However, the Gazprom chief denied any ambitions to take over Russia's top oil producer.
"We are not considering taking part in the auctions for the sale of Yukos assets," RIA-Novosti quoted him as saying.