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<\/div>Vladimir Putin with Igor Sechin on Dec. 7.<\/p>\n<\/div>\n
Glencore said in a statement Wednesday it would commit 300 million euros in equity, with the rest coming from the Qatar Investment Authority — itself Glencore\u2019s largest shareholder — and bank financing. Glencore said the deal was still in \u201cfinal-stage negotiations\u201d and would likely close in mid-December. The QIA declined to comment. Putin, who announced the deal on television with Rosneft Chief Executive Officer Igor Sechin, put the total deal value at 10.5 billion euros. It wasn\u2019t immediately clear why the figures differ.<\/p>\n
\u2018Santa Claus\u2019<\/h3>\n
Bringing in buyers for Rosneft, especially a trader like Glencore, probably makes \u201cPutin smile all the way to when Santa Claus comes around in Moscow,\u201d Steen Jakobsen, the chief investment officer of Saxo Bank A\/S, said on Bloomberg Television on Thursday. Putin \u201cwas under pressure because the privatization program in Russia has been very stale and it has been almost impossible to find them a deal partner.\u201d<\/p>\n
Rosneft, which\u00a0pumps almost 5 million barrels a day, held talks with more than 30 potential buyers from Europe, America, Asia and the Middle East,\u00a0Sechin told Putin on state television. \u201cThe deal became possible only thanks to your personal contribution.\u201d<\/p>\n
The price was the \u201cmaximum possible with the minimum discount,\u201d Sechin said. \u201cOne of the largest European banks\u201d will provide financing, he added, without specifying which one.<\/p>\n
Intesa Sanpaolo SpA agreed to provide financing for Glencore, according to two people familiar with the deal who declined to be identified because they were not authorized to speak on the matter.\u00a0Intesa, which worked for the Russian government as its consultant on the Rosneft privatization sale, declined to comment, as did Rosneft. A Glencore\u00a0spokesman couldn\u2019t immediately be reached.<\/p>\n
Russia is selling assets to raise money after the collapse in oil prices sapped government revenue.\u00a0Putin had said in October that, in the absence of buyers willing to pay an acceptable price, Rosneft might buy back its own shares and sell them on later.<\/p>\n
\u2018Major Win\u2019<\/h3>\n
\u201cThis is also a major win for Rosneft that avoids going through a ridiculous self-privatization exercise,\u201d Luis Saenz, head of equity sales and trading at BCS Financial Group in London, said in a note. \u201cMost importantly, a massive positive for Russia that\u2019s moving closer to breaking the sanction\/isolation regime.\u201d<\/p>\n
Rosneft shares\u00a0jumped 6.2 percent to a record 378.15 rubles as of 12:04 p.m. Moscow time.\u00a0 Contracts on the company fell 5 basis points on Thursday to 304 basis points, the lowest in more than a month, the data show. A decrease signals improvement in perceptions of credit quality.<\/p>\n
Glencore shares added 0.5 percent to 298.20 pence. Credit-default swaps insuring Glencore\u2019s debt against losses for five years were little changed at 170 basis points, near the lowest since July 2015, according to data compiled by CMA.<\/p>\n
Mining Footprint<\/h3>\n
The deal marks the third big acquisition for Glasenberg after he led the takeover of mining company Xstrata and grain merchant Viterra. Glasenberg has transformed Glencore, which he floated only five years ago, into a commodities trader with a huge mining footprint and, now, a large oil production base.<\/p>\n
Glencore is a longtime investor in Russia, with a blocking stake in mid-sized oil producer\u00a0in RussNeft PJSC, as well as substantial agricultural holdings and shares in aluminum giant United Co. Rusal.\u00a0It also participated, along with Vitol SA, in a $10 billion prepayment deal with Rosneft for crude supplies in 2013.<\/p>\n
But in a sign of the political sensitivity of dealing with Rosneft, which is subject to financial and technical sanctions, Glencore said it would be \u201cfully ring-fenced\u201d from exposure to the Russian state company, outside of a 0.54 percent \u201cindirect equity interest.\u201d The bank financing in the deal will not include recourse to its balance sheet, Glencore said. The agreement also includes a new five-year supply deal with Rosneft for 220,000 barrels a day of crude, a boost for Glencore, which last year lost its status as the top trader of Russian crude.<\/p>\n
The supply deal could deliver annual trading profits of about $80 million, Bank of America Merrill Lynch analysts led by Jason Fairclough wrote in a note. They said the view the deal \u201cpositively.\u201d<\/p>\n
Qatar, OPEC<\/h3>\n
On Qatar\u2019s part, the deal marks a rare venture of an OPEC member into Russia, the world\u2019s second-largest oil producer. Moscow has joined forces with OPEC, saying last week it will cut output by 300,000 barrels a day to add onto the 1.2 million barrels a day that the oil-producers group announced. Qatar played a key role in the OPEC cut, acting as a go-between Saudi Arabia, Iran and Iraq and hosting meetings including oil ministers from Riyadh and Moscow.<\/p>\n
The Rosneft sale was the keystone of the government\u2019s privatization program this year to help narrow the budget deficit. Rosneft played a key role in the second-biggest deal in Russia this year, buying the state\u2019s stake in oil company Bashneft PJSC for\u00a0$5 billion in October. Sechin, Putin\u2019s longtime ally, persuaded the government that selling Rosneft shares after gaining control of the smaller producer would attract foreign buyers and boost the price. Russia will retain a controlling stake in Rosneft and BP Plc owns 19.75 percent.<\/p>\n
Putin contributed to boosting Rosneft shares in recent weeks as he helped to negotiate a pioneering deal with OPEC on cutting output, which has lifted oil prices.<\/p>\n
The transaction is so big that Putin specifically asked Sechin to work with the Finance Ministry and central bank to ensure that it doesn\u2019t destabilize the currency market when the proceeds are converted into rubles. The ruble gained against the dollar in late trading after the deal was announced, before weakening Thursday.<\/p>\n","protected":false},"excerpt":{"rendered":"
Commodity trader Glencore Plc and Qatar\u2019s sovereign wealth fund agreed to buy a 10.2-billion euro ($11 billion) stake in Russia\u2019s largest oil producer from the state in a triumph for President Vladimir Putin over sanctions imposed by the West. The surprise deal gives the buyers a 19.5 percent stake in Rosneft PJSC, which the U.S. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-1469","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/posts\/1469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/comments?post=1469"}],"version-history":[{"count":2,"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/posts\/1469\/revisions"}],"predecessor-version":[{"id":1471,"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/posts\/1469\/revisions\/1471"}],"wp:attachment":[{"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/media?parent=1469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/categories?post=1469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.akturk.com\/en\/wp-json\/wp\/v2\/tags?post=1469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}