Decree on two large tanker companies merging has been signed

On 20 June 2007 the President of Russia Vladimir Putin approved establishing of a joint enterprise on the base of existing “Sovkomflot” and “Novoship” joint stock companies. On the same day the President of the Russian Federation Vladimir Putin met Sovcomflot CEO Sergey Frank in the residence Novo-Ogarjevo (Moscow) and signed a Presidential decree transferring the Russian government’s equity stake in Novoship to Sovcomflot’s charter capital.

Sergey Frank reported on the results of Sovcomflot’s activities over the period of the 2005 and 2006 fiscal years and on the prospects for the future development of Russia’s largest shipping company in the context of the Presidential Decree.

Consolidation of the Russian state-owned shipping assets will result in the creation of one of the world’s largest tanker companies.

The combined company will be able to offer the full range of shipping services to Russian and international oil & gas majors on the basis of the most advanced technologies, including LNG shipping and servicing offshore projects.

According to President Putin, the merger of Sovcomflot and Novoship is justified in view of the ongoing globalization of the world economy and the continuing consolidation in the energy and shipping sectors.

However, scale as such is not the main objective. More important is the creation as soon as possible of a national Russian public tanker company which will meet best international practice as regards quality of service, corporate governance, and shipping technologies, and which will be capable of substantially increasing the competitiveness of Russian shipping.

The official Russian maritime strategy recognises the importance of the competitiveness of shipping and its role in Russia’s integration in the global transportation system and in the development of the Russian economy.

The need for the creation of a tanker company of such high quality and possessing the necessary financial, technical and management skills is primarily dictated by the need for the further development of the Russia’s strategically important oil & gas industries.

The development of the vast natural resources underneath the Arctic shelf and off Russia’s Pacific coast is virtually impossible without having a specialized ice-class fleet for LNG and oil transportation.

President Putin mentioned that the government is interested in the combined company’s activities facilitating the social and economic development of a number of Russian maritime regions such as Saint Petersburg, Novorossiysk and Murmansk which expect to benefit from new jobs created in the shipbuilding and shiprepair industries and from more demand for maritime training.

Sovcomflot Group is also expected to play a more active role in the development of Russian national transport infrastructure including ports and terminals for oil and oil products.

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