- Title: Glencore, Qatari fund to buy 19.5 pct stake in Russia's Rosneft
- Date: 8th December 2016
- Summary: BAAR, SWITZERLAND (FILE) (REUTERS) VARIOUS OF GLENCORE HEADQUARTERS
- Embargoed: 23rd December 2016 14:56
- Keywords: Intesa Sanpaolo Qatar Glencore Kremlin oil Rosneft banking finance
- Location: MOSCOW, RUSSIA / BAAR, SWITZERLAND / KATANGA MINE, DEMOCRATIC REPUBLIC OF CONGO
- City: MOSCOW, RUSSIA / BAAR, SWITZERLAND / KATANGA MINE, DEMOCRATIC REPUBLIC OF CONGO
- Country: Russia
- Reuters ID: LVA0035C0X7KD
- Aspect Ratio: 16:9
- Story Text: Emerging market stocks climbed the most in a month on Thursday (December 8), as Russia's approval of the sale of a 10.5 billion euro ($11.3 billion) stake in its largest oil firm sent Moscow shares to a record high and forecast-beating Chinese trade data lifted the mood.
Russia said it had sold a 19.5 percent government stake in oil giant Rosneft to Qatar's sovereign wealth fund and Glencore.
Italian bank Intesa Sanpaolo is expected to provide a large chunk of funds to a consortium of Qatar and commodities trader Glencore, two sources familiar with the transaction said.
Glencore said it would finance part of the deal by putting up 300 million euros of its own equity, with the rest being financed by the Qatar Investment Authority and by non-recourse bank financing.
QIA and Intesa declined to comment. Intesa was one of the advisors to Rosneft on the privatisation.
The sale of Rosneft's stake, announced on Wednesday (December 7) by Russian President Vladimir Putin and Rosneft's chief Igor Sechin, confounded expectations that the Kremlin's standoff with the West would scare off major investors.
The deal suggests the lure of taking a share in one of the world's biggest oil companies outweighs the risks that come with Western sanctions imposed on Russia over the conflict in Ukraine.
Putin congratulated Sechin, one of his closest lieutenants, on the deal and said he hoped that the consortium of new investors would improve Rosneft's governance and transparency and would raise its market value.
Rosneft is subject to U.S. sanctions imposed after Russia annexed Ukraine's Crimea region in 2014. But since the money from the sale of the stake will go to the Russian state, rather than to Rosneft, the sanctions do not directly apply.
"If we are talking about sanctions imposed by the USA, if we talk about EU sanctions - then the deal, which includes old shares, shares that have already circulated in the market - they are not affected by sanctions. Therefore we cannot say that sanctions could affect this particular deal," said Victor Khaikov, president of the National Association of Oil and Gas Service.
"Of course there are certain recommendations not to work, or to try and avoid or minimise contact with those Russian companies that are on the sanctioned list. But in this particular case it isn't a problem because one side of the deal is the Qatari sovereign fund and the other is Glencore, a company representing Switzerland, which is not part of the EU," he added.
The transaction pointed to a possible reassessment by foreign investors of the risks of dealing with Russia, at a time when the election of Donald Trump as U.S. president has heightened expectations of a thaw between Moscow and Washington.
"The United States will have a new president, therefore foreign policy, as he (Donald Trump) has declared, most likely will change. In what direction it is hard to say now, but nonetheless there is hope that the sanctions will soon either be minimised or cancelled," said Khaikov.
The deal was announced days after Russia and OPEC - dominated by Saudi Arabia and its allies Qatar, the UAE and Kuwait - agreed to coordinated output cuts to support oil prices, the first time they have cut in tandem in 15 years.
State-owned Rosneft had kept the deal, which is meant to help Russia boost its budget revenues, a tightly-guarded secret.
The Italian government, banks and firms have long standing relationships with Russia, although ties have cooled somewhat since the times of former Italian Prime Minister Silvio Berlusconi, who called Putin a friend.
The involvement of Qatar in a Russian privatisation deal comes as a surprise, especially given years of tensions over Syria, where Russia is effectively fighting a proxy war with Saudi Arabia and Qatar.
The Kremlin said on Thursday the Rosneft deal was purely commercial and not political.
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