The Russian government has agreed to sell its largest oil stake in Rosneft, in a bid to rescue its ailing economy.
London-listed company Glencore and the Qatar Investment Authority (QIA) have agreed to acquire a 19.5 percent stake in the company for €10.5bn (£8.9bn). According to the deal, Glencore will supply €300 million in funding, with the rest made up by the QIA and through bank financing.
Rosneft been struggling in recent years, as the over-saturation in the oil market has continued to impact oil prices and thus its access to revenue. However, following OPEC’s agreement of their first output cut in 8 years last week, oil prices have since rebounded to $50 a barrel which has since revitalized the sector.
“The transaction was made on an upward trend in oil prices and reflects on the value of the company,” Russia’s president Vladimir Putin commented during a televised meeting with Rosneft boss Igor Sechin. “In that sense this is a good time.” He added.
The deal will mean that investor Glencore will acquire around 20 percent stake in the company in return for receiving 220,000 barrels of oil daily from the producer. It is already the biggest trader in Russian oil, and thus the agreement will prove a boost to its commodity shipping business. Glencore and QIA will join British-held BP to become a shareholder in the oil company. As of 2011, BP has retained an 18.5 percent stake in the Russian oil firm.
This comes amid Glencore made the move towards reinstating dividends just last week, following a challenging few years. In an announcement, Glencore stated that it had completed sales of assets in order to bring in debt targets in line with $17 billion for the end of the year. Glencore had previously racked up a debt that at its peak had reached $30bn (£23.7bn), as it continued to struggle in a depleting commodities market.
