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Italy’s Financial Security Committee has approved a $5.6-billion (5.2-billion-euro) loan from Intesa SanPaolo to Glencore and the Qatar Investment Authority for the acquisition of a 19.5-percent stake in Rosneft.
The deal, first announced in December and confirmed this January, was valued at $11.3 billion (10.5 billion euros), of which Glencore agreed to contribute some $324 million, and the rest was forked out by the Qatar partner, through loans.
The Intesa loan was reviewed by the Financial Security Committee for possible violations of the European Union sanctions against Russia. The body, however, which includes representatives of Italy’s foreign, justice, and finance ministries, as well as the financial police, the central bank and the anti-mafia authorities, found no violations. Rosneft, as well as its chief executive, Igor Sechin, are among the sanctions targets.
According to Italian sources cited by Reuters, Intesa, Italy’s largest lender, agreed to provide the money for the acquisition in early December, but the FSC review was delayed because the new Italian government was sworn in later in the month. As a result, Russia’s VTB bank provided a bridge loan until the Italian money became available. VTB, by the way, is also under sanctions, but the FSC said that its participation in the deal did not violate these.
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Russia’s budget received about $11.67 billion from the deal, including $300 million in extra dividends. Rosneft, for its part, got an indirect stake in Glencore of 0.54 percent. For Glencore, the deal was a way to get ahead of its main competitor, Trafigura, which is well received in Moscow, and deepen its own ties in Russia. For the Qatar Investment Authority, the acquisition is part of its investment strategy.
The deal took many observers by surprise, as expectations were that such a substantial stake in one of the world’s biggest crude oil producers would rather be sold to a domestic investor.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.