Russia"s proposal to merge its state-run...

"The proposal merits attention. We"ll naturally examine it because it was made by the prime minister of a very large state, our neighbor, out of good intentions," Azarov said.

At a meeting of the committee for Russia-Ukraine economic cooperation on April 30, Russian Prime Minister Vladimir Putin proposed merging both energy companies. Gazprom CEO Alexei Miller said the energy ministers of Russia and Ukraine would meet in Moscow with the management of Gazprom and Naftogaz after the May holidays (after May 10) to discuss the details of a possible merger.

The proposal comes after the two ex-Soviet republics reached a deal in April on extending the lease on the Russian Navy base in the Ukrainian port of Sevastopol for 25 years after the current lease expires in 2017.

In return for the lease extension, which may be extended for an additional five years, Ukraine will receive a 30% discount on Russian natural gas. The discount will be worth an estimated $40 billion over

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