Russian oil firm’s shares leap after R152bn sale

SHARES in Russian oil giant Rosneft leapt yesterday after the Kremlin announced the ß10.5-billion (R152-billion) sale of a stake to commodities trader Glencore and Qatar’s sovereign fund.

Late on Wednesday, President Vladimir Putin hailed the surprise deal for 19.5% of the state-controlled firm as the largest in the global energy sector for 2016, a major fillip for the strongman leader as he seeks to plug the country’s growing deficit.

The sell-off is part of a broader privatisation drive and comes despite Moscow’s being mired in Western sanctions over the crisis in Ukraine that have played a major part in plunging the country into recession.

Rosneft stock was up about 5% on the Moscow Exchange to 374 rubles (R81), valuing the company overall at about ß58-billion (R842-billion).

Swiss-based Glencore and the sovereign fund of gas-rich emirate Qatar will go 50-50 on the deal, which leaves the Russian state controlling just over 50% of the country’s largest oil firm.

The sale of the stake in Rosneft was long in the pipeline but up until the last minute most observers expected the company itself to buy the shares from the government.

Rosneft chief Igor Sechin told Putin on Wednesday the firm had taken part in talks with more than 30 companies, funds, professional investors, sovereign funds, financial institutions from countries in Europe, the Americas, the Middle East and the Asia-Pacific region ahead of the deal.

The final agreement was being partly funded by a cash from “one of the major European banks”, he said, without naming the lender. Investment bank Renaissance Capital said it was an Italian bank financing the lion’s share of the purchase by Glencore.

Glencore said the deal “would be conditional on the subsequent finalisation of all relevant financing, guarantee and other agreements”, and could be closed this month.

Sechin pointedly thanked Putin and said the deal was only made possible thanks to his personal input.

Kremlin spokesman Dmitry Peskov said: “This deal is exclusively commercial.”