Ukrainian Prime Minister Mykola Azarov ruled out a merger between Russian energy giant Gazprom and Ukraine's national oil and gas company Naftogaz on Monday, but welcomed the idea of a joint venture between the two companies to develop gas deposits in the Astrakhan region in south Russia and in the Yamal region in the Russian Arctic.

The idea of merging both energy companies was touted in late April by Russian Prime Minister Vladimir Putin.

Gazprom CEO Alexei Miller said at the time that both companies should seek the merger through joint ventures as the first step towards consolidation. He also said that Russia could contribute deposits, while Ukraine could contribute its gas transportation system.

""These are good deposits. If these deposits are used as the basis for a joint venture and an asset swap, I believe we'll be able to agree," Azarov told RIA Novosti news agency.

Azarov also explained why the two companies could not merge.

"The merger in conditions when the companies have incompatible capitalization or, to be more exact, incomparable with each other is called a takeover rather than a merger. No country possessing such a prize asset as its gas transportation system, its gas and oil refining capacities would agree to such a merger," he said.


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