MOSCOW, Nov 28: Russian oil firm Sibneft denied on Friday that it had unilaterally pulled out of a merger with its bigger rival Yukos, insisting that major shareholders in both companies had approved the decision.

“The core shareholders of both companies agreed to suspend the merger,” Sibneft spokesman John Mann told AFP.

Sibneft had earlier issued a statement saying the merger, which would have created the world’s fourth-largest oil and gas giant, was called off by mutual consent.

But Yukos chief executive Simon Kukes denied that the deal was over.

“The process of merging the companies is continuing and is not suspended,” he was quoted as saying by the Interfax news agency at a Yukos shareholders’ meeting in Moscow.

A spokesman for Yukos suggested earlier that it was Sibneft that broke off the merger between the two companies planned to have been completed later in the day.

Asked by AFP whether Sibneft was the party that pulled out of the deal, as market players here speculated, Yukos spokesman Yevgeny Fokin said: “That is my understanding.”

Sibneft did not explain why the decision was reached, but it came amid a massive government inquiry into Yukos that has seen its top shareholder and former chief executive Mikhail Khodorkovsky thrown behind bars.