Glencore, Qatar Sovereign Wealth Fund Take 19.5% Stake in Russia’s Rosneft

Glencore, Qatar Sovereign Wealth Fund Take 19.5% Stake in Russia’s Rosneft

Glencore, Qatar Sovereign Wealth Fund Take 19.5% Stake in Russia’s Rosneft

Commodities giant Glencore (L:GLEN) and Qatar’s sovereign wealth fund teamed up and acquired a 19.5% stake in Russia’s top state-controlled oil company, Rosneft (L:RNS), in a deal worth $11.3 billion, officials said Wednesday.

The sale is part of the Russian government’s efforts to sell some state assets to help balance the budget amid a 2-year recession.

President Vladimir Putin described the deal as the largest in the global energy market this year.

Speaking at a televised meeting with Rosneft CEO Igor Sechin, he noted that the deal follows a rally in global Crude Oil prices following OPEC’s decision to cut production.

“It’s a very good achievement,” President Putin said.

Russia has agreed to cut its output in sync with OPEC, and will attend a meeting with the cartel members Saturday to discuss specifics.

The state will retain a controlling stake in Rosneft, 49% of which now belongs to private investors. BP (NYSE:BP) already owns 19.75% of Rosneft.

President Putin noted that the deal should help improve transparency and corporate governance at Rosneft and boost its capital buffers.

Prior to the privatization deal, Rosneft bought the Russian Oil company Bashneft, 1 of the nation’s most efficient Crude Oil producers.

October’s deal cemented Rosneft’s role as the nation’s largest Crude Oil producer.

Mr. Sechin reported to Putin that the “strategic” deal envisages the creation of a joint venture between Rosneft and the consortium comprised of Glencore and Qatar’s fund, as well as a long-term contract with Glencore for future crude supplies. He said that Glencore and the Qatari fund have equal stakes in the consortium.

Dmitry Peskov, said that President Putin ordered Rosneft to work together with the finance ministry and the central bank to prevent the deal from destabilizing Russia’s currency markets. The deal would see a big influx of foreign money, potentially raising the value of the ruble.

Mr. Sechin, a Key associate of Mr. Putin for more than 20 years, is believed to wield influence that’s 2nd only to the Russian leader. The latest deals will further increase his influence.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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