Glencore, Qatari fund buy 19.5 per cent in Russia’s Rosneft

Speaking at a televised meeting with Rosneft CEO Igor Sechin, Putin noted that the deal follows a rally in global oil prices following OPEC’s decision to cut production.

Russia has agreed to cut its output in sync with OPEC, and will attend a meeting with the cartel members on Saturday to discuss specifics.

The state will retain a controlling stake in Rosneft, 49 per cent of which now belongs to private investors. BP already owns 19.75 per cent of Rosneft.

Putin noted that the deal should help improve transparency and corporate governance at Rosneft and boost its capital buffers.

Sechin reported to Putin that the “strategic” deal envisages the creation of a joint venture between Rosneft and the consortium comprised of Glencore and Qatar’s fund, as well as a long-term contract with Glencore for future crude supplies. He said that Glencore and the Qatari fund have equal stakes in the consortium.

Sechin added that Rosneft had conducted talks with over 30 potential bidders before striking the deal.

Putin’s spokesman, Dmitry Peskov, said that Putin ordered Rosneft to work with the finance ministry and the central bank to prevent the deal from destabilizing Russia’s currency markets. The deal would see a big influx of foreign money, potentially raising the value of the ruble.

Prior to the privatization deal, Rosneft in October bought another state-controlled Russian oil company, Bashneft, one of the nation’s most efficient crude producers. The deal cemented Rosneft’s role as the nation’s largest oil producer.

Rosneft’s bid for Bashneft drew strong opposition in the Russian Cabinet, with Economic Development Minister Alexei Ulyukayev saying it was wrong for the state-owned company to take part in a privatization drive.

But Putin defended the Bashneft deal, arguing that since Rosneft has foreign shareholders, the sale wasn’t simply a transfer of assets from one state-owned company to another.

Ulyukayev was put under house arrest last month on charges of allegedly taking a $2 million bribe from Rosneft for giving the green light to the deal during a sting operation by Russia’s domestic security agency, the FSB.

Critics, however, questioned why the alleged bribe was made a month after Rosneft completed the deal, and why the experienced Ulyukayev would be silly enough to extort money for a deal already approved by Putin.

Most saw it as part of a power play by Sechin to crush any resistance to further expansion of Rosneft’s energy empire.

Sechin, a key associate of Putin’s for more than two decades, is believed to wield influence that’s second only to the Russian leader. The latest deals will further increase his clout.

Vladimir Isachenkov, The Associated Press

by Canadian Press

Glencore, Qatari fund buy 19.5 per cent in Russia’s Rosneft

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