Still, YUKOS Chief Executive Officer Mikhail Khodorkovsky didn’t deny long-term prospects of such a deal.
 
“There is no deal, but when there is a deal we will make you happy by telling you,” Khodorkovsky told reporters on the sidelines of a major economic forum in Moscow.
   
“We welcome foreign investment. It lowers the cost of capital and raises the value of our assets, but you can't apply the word 'necessary' to it,” he added, AFP reported. 

 Guts and brains
   
A London source familiar with the YUKOS-Sibneft deal said: “Exxon Mobil are in the driving seat if they want to be...It's down to whether they have the guts and the brains.”

However, completion of the YUKOS-Sibneft merger, effectively a $15 billion takeover of smaller Sibneft, was seen as the prerequisite to any foreign involvement.
   
It will simplify talks between the newly-created firm and a potential Western investor, even though minority investors who hold 8% of Sibneft have yet to be brought into the deal.

“We welcome foreign investment. It lowers the cost of capital and raises the value of our assets, but you can't apply the word 'necessary' to it”

Mikhail Khodorkovsky
Yukos CEO

The Financial Times also said on Friday that Exxon Mobil was in talks with YUKOS, reviving speculation that has been continuing for weeks.

A trader in Moscow said the market believed a deal was on the cards.
   
“The market consensus is that talks are under way and this increases the attractiveness of other oil assets as well.”

Shares rise

By 11:15 GMT shares in YUKOS were trading up 2.1% at $15.95. Sibneft was up 4.7% at $3.35, adding to strong overnight gains.
   
YUKOS-Sibneft will become a group with oil and gas output on a scale similar to that of French giant and world number four firm Total. Together they will produce more oil and gas than Kuwait.
   
The new company is expected to have a market value of about $45 billion, making it by far the largest listed group in Russia and ranking it number seven in the league of the world's top oil firms by market value.
   
Under terms agreed earlier this year, YUKOS's core shareholders will pay Sibneft's core shareholders, who hold the other 92% of the firm, $3 billion plus 26% and one share in the new group.
 
Britain's BP, the world number three oil firm, has blazed a trail into post-Soviet Russia with a $6 billion plus investment in a joint venture with TNK.
   
Chevron Texaco is also said to be interested in buying into YUKOS-Sibneft.