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Breaking News:

Oil Prices Gain 2% on Tightening Supply

Russia Dismisses Reports It Could Buy Back Rosneft Stake From Qatar

The Kremlin dismissed on Wednesday speculation that Russia could buy back part of the 19.5-percent stake in its oil giant Rosneft that it had sold to Qatar Investment Authority and Glencore, with Kremlin spokesman Dmitry Peskov telling reporters that suggestions about a buy-back were “not possible and incorrect”.

“Such speculative arguments are impractical and irrelevant,” Russia’s TASS news agency quoted Peskov as saying in answer to a question if Russia could buy back Rosneft shares from Qatar in view of the strained relations between several Arab states and Qatar.

Earlier today, The Wall Street Journal reported--citing people familiar with the issue--that Qatar and Russia had agreed that Moscow could buy part of the stake from Qatar, and this could happen in the next 10 years.

Earlier this year, Swiss-based commodity trader and miner Glencore and Qatar’s sovereign wealth fund, Qatar Investment Authority, announced the completion of a deal for the acquisition of 19.5 percent in Rosneft. 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.

Related: OPEC Cuts Send Russia’s Oil Heartland Into Decline

According to The Journal’s sources with knowledge of the deal, Russia’s sale of the stake acted as an emergency loan to help Russia shore up budget gaps—meaning that the sale was always meant to be undone at some point.

Both Glencore and the Qatar Investment Authority told The Journal that the deal’s details did not include a right for Russia to buy back Rosneft shares from the Glencore-QIA consortium they had formed for the deal.

According to the people with knowledge of the matter, Qatar wanted to temporarily hold Rosneft shares and profit from selling them back to Russia later, expecting oil prices to increase and Rosneft’s shares to become more expensive, the Journal reported.

By Tsvetana Paraskova for Oilprice.com

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