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Earlier in the year the Russian oil company Rosneft acquired its rival TNK-BP for a sum of $55 billion. The plan was to create an oil company that produced more oil than Exxon Mobil, whilst at the same time helped the Russian government to increase its power over the nation’s energy sector.
Part of the deal was financed by a $29.8 billion loan (the largest in Russian history), which Rosneft had managed to secure from various banks due to the promise of a share in an asset sale in the region of $15 billion which Rosneft would hold after the purchase was complete.
The banks are still waiting for any sign of an asset sale and the earnings that they would receive from such a deal. One of the bankers said, “we thought bonds and asset sales would kick start straight after the closing of the TNK-BP deal. We are now in the dark.”
Banks are also hoping that the asset sale will take place this year, as other M&A activity in the market has been very rare, and the fees that they could earn from advising and overseeing such a large asset sale would help improve their financial records for the year.
The problem is that, although Chief Executive Officer Igor Sechin stated that he would sell off non-vital assets in order to improve the focus and efficiency of the energy giant, one banker claims that Rosneft “have never sold anything, ever. It's not in their genes.”
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Some natural gas assets were expected to be sold, but now Rosneft is looking at buying a natural gas firm to develop those reserves; “these assets are producing on-shore fields, they are big cash cows. The pressure to sell is not there.”
Rosneft has admitted that when negotiating for the loan they did mention the possibility of an asset sale after the deal was done, but never spoke about exactly when, or which assets would be sold.
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…