Rosneft has closed the acquisition of smaller sector player Bashneft, after Prime Minister Dmitry Medvedev signed a decree for the divestment of the government's 50.075-percent holding in the target company. The deal is valued at US$5.3 billion.
Bashneft - along with Rosneft, for that matter - has been on a short list of state-owned assets for sale, released by Economy Minister Alexei Ulyukayev earlier this year. Rosneft's plan to take over its smaller rival, however, initially met with opposition from the Kremlin.
In August, Russian media reported that the sale of the controlling interest in Bashneft had been put on hold, apparently because of a conflict between the two main bidders, Rosneft and Lukoil, although the government's official position was that the economic environment is unfavorable for the sale of such a large stake and that it would be better to wait for another few months to make Bashneft a more valuable target.
At the time, business daily Kommersant cited a federal government official as saying that the decision for the delay was made by the PM, Dmitriy Medvedev, because the situation around the bidding process had become too tense, creating conflicts between government and presidential officials.
Now, it seems the conflicts have been resolved, probably after President Putin gave the green light for the purchase. According to a source cited by TASS, Bashneft will get a new president from the senior management ranks of its buyer, most likely VP Andrey Shishkin.
According to one Russian economic expert cited by business media FAP News, the Bashneft purchase is part of larger economic processes going on in Russia, aiming to secure state control over "vital" industries, including natural resources, by letting one player monopolize the relevant industry with a view to, supposedly, improve the management of "commodity and financial flows." flows.
Yet, the Bashneft purchase could make Rosneft itself a more attractive target for potential buyers when the time comes: the Kremlin is planning to put up for sale a minority stake of 20 percent in the country's biggest state-owned oil company and one of the world's top producers.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More