The Russian government is working on a plan under which oil behemoth Rosneft (OTC:RNFTF) would take over fellow state-backed producer Gazprom Neft - a unit of Gazprom (OTCPK:GZPFY) - and independently owned Lukoil (OTC:LUKOY), the Wall Street Journal reported on Saturday, citing people familiar with the discussions.

According to WSJ, the resulting entity would be the world's second-biggest oil company, after Saudi Arabia's Aramco (ARMCO). The combined giant would pump nearly three times the output of ExxonMobil (XOM), the largest U.S. oil producer, WSJ added.

Talks among executives and government officials have taken place over the past few months, WSJ said, citing the people. The discussions may or may not result in a deal, and details of any plan could change, the people added.

Rosneft, Gazprom, and Lukoil did not immediately respond to requests for comment from Seeking Alpha outside regular business hours, and neither did the Kremlin. Gazprom Neft could not be immediately reached.

All three companies are under U.S. sanctions, amid Russia's ongoing invasion of Ukraine that is now over two-and-a-half years old. In the face of sanctions, Russian President Vladimir Putin has managed to keep the nation's economy stable largely due to its vast oil industry, selling to customers in countries such as China and India.

Obstacles to the proposed Russian oil mega-merger include opposition from some Rosneft and Lukoil executives as well as the challenge of amassing the funds to pay Lukoil shareholders, the WSJ report said.

Here are some exchange-traded funds that have exposure to Russia: (DEM), (DVYE), (ECOW), (DWCR), (FILL), and (EMXC).

And here are some oil ETFs: (USO), (UCO), (DBO), (OILK), and (USL).

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• Financial information for Rosneft Oil
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