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Glencore, Qatar Close Deal for 19.5% Stake in Russian Rosneft

Rosneft HQ

Swiss-based commodity trader and miner Glencore and Qatar’s sovereign wealth fund have announced the completion of a deal for the acquisition of 19.5 percent in Russia’s oil behemoth Rosneft.

The news first made headlines in December, taking markets by surprise, as Rosneft’s partial privatization was expected by most to be limited to Russian investors.

The price tag on the stake was around US$11.3 billion (692 billion rubles), of which Glencore agreed to contribute US$324 million. The remainder was forked over by the Qatar Investment Authority, as well as non-recourse bank financing.

Russia’s budget received about US$11.67 billion (710.8 billion rubles) from the deal, including US$ 300 million (18 billion rubles) in extra dividends. Rosneft, for its part, got an indirect stake in Glencore of 0.54 percent.

According to a Bloomberg analysis released soon after the initial announcement of the deal, for Glencore, it is a way to get ahead of its main competitor, Trafigura, and deepen its ties with Moscow. Russia has abundant natural resources, which makes it a magnet for commodity traders.

Trafigura teamed up with Rosneft last year to buy 98 percent in India’s Essar Oil in a move that was seen as Trafigura getting its feet under Moscow’s table and securing a good working relationship with the authorities that would facilitate its access to oil, gas and other commodities.

Now, with the Glencore-Rosneft deal, another sitter has joined the table, receiving access to some 220,000 barrels of crude daily, to add to another 188,000 bpd from Rosneft’s output, agreed back in 2013.

For Glencore, the Rosneft deal also reflects its return to business as normal, after a tough year tackling a massive debt of US$30 billion. The load was finally placed under control late in 2016, and Glasenberg announced shareholders would receive US$1billion in dividends.

By Irina Slav for Oilprice.com

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