Nov 9 (Reuters) - Russia is working on a plan to merge

state-backed Rosneft Oil with Gazprom Neft,

creating the world's second-biggest crude oil producer, the Wall

Street Journal reported on Friday.

Talks between executives and government officials took place

over the past few months, and a deal may or may not happen, the

newspaper said, citing people familiar with the matter whom it

did not identify.

A combination of Rosneft and Gazprom Neft, a subsidiary of

Gazprom and Lukoil, would be second to Saudi

Arabia's Aramco and could pump almost three times U.S.

oil producer Exxon's output, the report added.

There are some obstacles, including opposition from some

Rosneft and Lukoil executives and the problem of collecting

funds to pay Lukoil shareholders, the report said.

Lukoil, Rosneft, Gazprom and the Kremlin did not immediately

respond to Reuters requests for comment, while Gazprom Neft

could not immediately be reached.

The Journal quoted a Rosneft spokesperson as saying the

report was incorrect but declining to answer questions, while a

Lukoil spokesman told the paper that neither the company nor its

shareholders were in merger negotiations "with any parties, as

this would not be in the interest of the company".

The newspaper quoted a Kremlin spokesperson as saying the

administration had no knowledge of a deal.

The Kremlin said last month it could not confirm a report

that Russia's energy minister had put forward a proposal to

nationalise the energy sector.

A channel called EJ on the Telegram messaging app, citing

unnamed sources, reported that Energy Minister Sergei Tsivilev

had suggested to President Vladimir Putin at a meeting in the

Kremlin that the energy sector - a key provider of cash for the

state - be nationalised.