• 3 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 8 minutes Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?
  • 11 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 15 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 1 min The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 9 hours Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 13 hours As Iran Nuclear Deal Flounders, France Turns To Saudi For Oil
  • 9 hours The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 18 hours Middle East on brink: Oil tankers attacked off Oman
  • 12 hours Never Knew Gasoline Prices were this important!
  • 9 hours Russia removes special military forces from Venezuela . . . . Maduro gone by September ? . . . Oil starts to flow ? Think so . .
  • 35 mins Plants are Dying
  • 6 hours We Are Better Than This
  • 1 day Britain makes it almost 12 days with NO COAL
  • 1 day Emmissions up, renewables nowhere
  • 10 hours The Latest: Iranian FM Says US Cannot Expect To ‘Stay Safe’
  • 11 hours (Un)expectedly: UK Court Sets Assange U.S. Extradition Hearing For February 2020
Alt Text

The Success Story Behind Tesla’s Tarnished Image

following a year of less-than-pleasing…

Alt Text

The Top 50 Oil & Gas Companies Of 2019

The playing field for global…

Alt Text

The Truth Behind The Torpedoed Tankers

The media, and indeed the…

Robert Berke

Robert Berke

Robert Berke is an energy financial analyst with experience as a government consultant to the State of Alaska.  

More Info

Trending Discussions

Does Russia Really Want To Privatize Rosneft?

In a sensational report last week, Russia announced a block-buster deal, the long planned privatization sale of nearly 20 percent of government held shares in the oil giant Rosneft, to Glencore trading company and its joint venture partner, the Qatar sovereign fund.

As noted here, the price of $11 billion made global headlines as the biggest foreign investment in Russia since the Ukraine conflict and provided a much needed cash infusion for the Russian government.

Russian media also trumpeted the news that sanctioned Russian industries now seemed able to raise large amounts of financing from recognized western financial and banking sources. This has set off sanction alarms at the U.S. Treasury Department that will certainly lead to an investigation into the deal’s financing.

But many in the Russian press are extremely skeptical that the deal took place as reported. Instead they are convinced that Rosneft itself, through a round-about arrangement, bought the government-owned shares. The skeptics point to the facts that because of the commodity market slump, Glencore was heavily in debt last year to the tune of $30 billion, and was busy rebuilding its balance sheet this year. They also pointed out that the deal for the sale of government shares has been on the table for many months, with no takers.

In a serious counter to Rosneft’s description of the deal, the skeptics offer an alternative scenario, where, in November, Rosneft issued bonds for $16 billion which were purchased by Russian banks on credit lines issued by the Russian Central Bank. The proceeds from the bond sale were transferred to the same bond-buying banks, which then provided the funds to underwrite the share purchase by Glencore and Qatar. Related: The Self-Driving Vehicle Revolution Has Begun

Although Rosneft insists that the bond money was raised exclusively to support company growth, and that a little known Italian bank (Banca Intesa Sanpaolo) underwrote the deal to buy government shares, few in the Russian or Italian financial press believe that any Italian bank would seek to openly cross U.S. sanction-makers.

The shareholder’s agreement seems to support the alternative scenario, with Rosneft remaining the fiduciary holder of the newly acquired shares, and leaving Glencore and Qatar with no voting rights. It’s hard to believe that any company making a multi-billion dollar investment in another company would so easily forego voting rights.

The rewards for collusion, if that's the case, is Glencore gets an additional five year off-take agreement from Rosneft for 220,000 barrels of oil per day, with the commission rate to the giant Swiss trader rising from 1 percent to 3 percent. As a deal sweetener, Rosneft also announced that it is raising its dividend rate from 25 percent to 35 percent.

If the alternative scenario proves true, the much-celebrated deal was in reality a share buy-back by the company, financed by the Russian Central Bank, and paid into the Government Treasury. That would mean that the U.S. Treasury can relax, as no foreign money was involved.

By Robert Berke

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment





Oilprice - The No. 1 Source for Oil & Energy News