Vladimir Putin wants to create one of world's largest shippers

President Vladimir Putin ordered the merger of two largest shipping companies Wednesday, creating one of the world's largest shippers.

Photo: Vladimir Putin wants to create one of world's largest shippers

The merger of OAO Sovkomflot and OAO Novorossiisk Shipping Company, known as Novoship, continues the trend by the Kremlin setting up government-controlled conglomerates in an effort to overhaul strategic sectors that have foundered since the Soviet collapse.

In addition to merging Sovkomflot and Novoship, the new company will be put on the government list of strategic enterprises, thus limiting foreign investors' access to the company's share, according to Putin's decree.

The government will also will transfer its 50 percent stake in Novoship onto Sovkomflot's balance sheet in the course of the merger, according to the decree.

Based in the Black Sea port of Novorossiisk, Novoship ships mostly crude oil and oil products, operating or owning 53 vessels. St. Petersburg-based Sovkomflot, which is already 100 percent state-owned, has a fleet of 56 vessels.

Sovkomflot General Director Sergei Frank, said the new company would be among the world's five largest shipping companies with close to US$5 billion (3.72 billion EUR) in assets.

Frank also said the merger would give major backing to energy projects on Russia's Far East and Arctic shelves.

"The consolidation of the two companies' assets will give strong and reliable support to major projects on Russia's continental shelf and future liquefied gas shipments," Frank said in televised comments.

In recent months, the government has forged an aircraft-manufacturing corporation bringing together several of the country's major builders, and is in the process of uniting the country's shipbuilding companies into a single state-controlled corporation. The country's atomic energy-related companies are also being combined.