Glasenberg emerges from Rosneft flip with oil deal and a medal

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.