Glasen­berg emerges from Ros­neft flip with oil deal and a medal

The Star Malaysia - StarBiz - - Front Page -

LON­DON: Nine months af­ter sur­pris­ing the world with an US$11bil ven­ture to buy a stake in Rus­sia’s state oil com­pany, Glen­core Plc is sell­ing most of it and emerg­ing from the deal with a valu­able crude sup­ply con­tract and po­lit­i­cal ties in Moscow bur­nished.

The com­pa­nies an­nounced on Fri­day that the Glen­core-Qatar con­sor­tium would sell the bulk of its stake in Ros­neft PJSC to CEFC China En­ergy Co, a lit­tle known but rapidly ex­pand­ing Chi­nese con­glom­er­ate. CEFC would be­come the third-largest share­holder in Rus­sia’s state oil cham­pion af­ter the Rus­sian state and BP Plc, while the Qatar In­vest­ment Au­thor­ity would re­tain a 4.7% stake.

Glen­core would be left with a stake of just 0.5% – but the com­modi­ties gi­ant will re­tain a prized side deal to trade 220,000 bar­rels a day of oil from Ros­neft.

“By means of es­sen­tially a po­lit­i­cal fa­vor to Moscow, they’re able to se­cure for them­selves a sig­nif­i­cant quan­tity of ma­te­rial to feed into their trad­ing busi­ness at a time when other traders are find­ing this an ex­tremely dif­fi­cult mar­ket,” Paul Gait, an an­a­lyst at San­ford C. Bern­stein Ltd in Lon­don, said by phone.

What’s more, the Baar, Switzer­land-based com­pany has ce­mented its po­lit­i­cal ties in one of the world’s top pro­duc­ers of com­modi­ties. For his role in the Ros­neft pri­vati­sa­tion deal, Glasen­berg was awarded Rus­sia’s Or­der of Friend­ship by Pres­i­dent Vladimir Putin.

In late 2016, the Rus­sian govern­ment was scram­bling to com­plete the planned sale of a 19.5% stake in Ros­neft to help nar­row the bud­get deficit. The deal with Glen­core and the Qatari sov­er­eign wealth fund, aided by fi­nanc­ing from In­tesa San­paolo SpA and Rus­sian banks, meant the bud­get re­ceived the pro­ceeds of the sale be­fore year-end.

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