Qatar comes to the rescue after sale of Rosneft stake runs into trouble

Qatar is taking a stake of nearly 19% in Rosneft, rescuing the Russian oil major from its stalled deal to sell a major stake to CEFC China Energy.

The deal strengthens ties between Moscow and Doha at a time when Qatar is facing boycotts by its Arab neighbours.

Qatar’s sovereign investment fund, QIA, initially bought 19.5% in Rosneft together with Glencore for $12bn during the Russian firm’s partial privatisation in 2016. But in 2017 the consortium agreed to sell a 14.16% stake in Rosneft to CEFC in a $9.1bn deal that was seen as important to helping expand relations between Russia and China.

That deal ran into trouble after CEFC chairman Ye Jianming was put under investigation by Chinese authorities over suspected economic crimes, Reuters reported in March.

Glencore said on Friday that the consortium that had been selling the Rosneft stake had been dissolved and said Qatar and Glencore would now own stakes directly. QIA would control an equity stake of 18.93% and Glencore would hold 0.57%.

CEFC has not commented publicly since the termination of the deal was announced.

The conglomerate is now conducting fire sales of its assets following the investigation into its chief and offering staff severance packages after failing to pay them for two months, as creditors scramble to collect debts amid growing regulatory scrutiny of the firm.

“CEFC China’s purchase of a stake in Rosneft has ended in a debacle, said Christian Boermel, senior research analyst at energy consultancy Wood Mackenzie. “Russia’s pivot to the East now feels more like a pivot to the Middle East, with Qatar coming to the rescue.”

Rosneft was hit hard by US sanctions on Russia over Moscow’s annexation of Crimea and incursion in east Ukraine.

But sources close to QIA have said Rosneft could prove to be a profitable long-term investment given that the Russian company is worth only $65bn despite producing more crude than US ExxonMobil, which is worth $324bn.