Two of Russia's biggest oil producers, Yukos and Sibneft, announced a merger on April 22, creating a world powerhouse rivaling TotalFinaElf and Chevron Texaco.
The two companies said the deal, by far the largest merger in Russia's emerging economy, would create the fourth largest private oil producer in the world.
Yukos, the country's second largest oil producer behind Lukoil, will play the dominant role in the new company, to be called YukosSibneft Oil, after the agreed acquisition of Sibneft, ranked fifth.
The statement said shareholders from the two sides "have agreed in principle to combine the two businesses in the largest ever industrial transaction in Russia.
"The combined oil and gas groups will not only be the largest in Russia, but will also rank as the world's fourth largest private oil producer."
Yukos President Mikhail Khodorkovsky is to be responsible for executive management of the new group, while Eugene Shvidler, his Sibneft counterpart, is to be proposed for chairman of the board of directors.
Khodorkovsky told a press conference the two companies "have some complex joint projects in the near future, in particular international diversification and regional development such as in eastern Siberia and the Far East."
The merger would "create a new potential for Russian business," he said.
However, the merger operation was "in its early stages and we cannot give you all the information," he stressed.
Interestingly, the two companies tried to merge operations in 1998 - the planned company's name was Yuksi - but negotiations broke down once the companies got a look at each others' books.
Including the reserves of Slavneft, the oil firm bought by Sibneft last year, the new group will hold reserves of 19.4 billion barrels of oil and gas equivalent.
Daily crude oil production including Sibneft's share of Slavneft will be approximately 2.3 million barrels, making YukosSibneft by far the largest producer of crude oil in Russia.
The current Russian market leader Lukoil produces around 1.5 million barrels a day.
The new group would boast 18.4 billion barrels in proven oil reserves, the largest held by a firm in the world, and 5.9 trillion cubic feet in proven gas reserves.
Robert Dudley, vice president of British oil giant BP and president of the BP-TNK Anglo-Russian joint venture formed in February, said that the merger was "a remarkable event."
The creation of a new, world-ranking company "shows that Russia is involved in the global economy," he said.
Russia is the second largest oil producer after Saudi Arabia and is currently completing plans to build pipelines from Siberia to China and to the northern port of Murmansk, where crude will be delivered to the U.S.A.