Sun, May 06, 2018 - Page 16 News List

Qatar steps in to rescue Rosneft’s troubled stake sale

Reuters, LONDON and MOSCOW

Qatar is taking a nearly 19 percent stake in Rosneft PJSC, rescuing the Russian oil major from its stalled deal to sell a major stake to CEFC China Energy Co (華信能源).

The deal strengthens ties between Moscow and Doha at a time when Qatar is facing boycott by its Gulf Arab neighbors.

Qatar’s sovereign investment fund, Qatar Investment Authority (QIA), initially bought 19.5 percent in Rosneft together with Swiss trading giant Glencore PLC for 10.2 billion euros (US$12.2 billion) during the Russian firm’s partial privatization in 2016.

However, the consortium last year agreed to sell a 14.16 stake in Rosneft to CEFC China Energy in a US$9.1 billion deal that was seen as key to helping expand relations between Russia and China, the world’s top energy exporter and top consumer.

That deal ran into trouble after CEFC founder and chairman Ye Jianming (葉簡明) was put under investigation by Chinese authorities over suspected economic crimes, Reuters reported in March.

On Friday, Glencore said that the consortium that had been selling the Rosneft stake had been dissolved, and that Qatar and Glencore would now own stakes directly.

QIA would control an equity stake of 18.93 percent and Glencore would hold about 0.57 percent.

The once high-flying conglomerate is now conducting fire sales of its assets following the investigation into its chief and offering staff severance packages after failing to pay them for two months, as creditors scramble to collect debts amid growing regulatory scrutiny of the firm.

“CEFC China’s purchase of a stake in Rosneft has ended in a debacle. Russia’s pivot to the East now feels more like a pivot to the Middle East, with Qatar coming to the rescue,” said Christian Boermel, senior research analyst, Russia Upstream, at energy consultancy Wood Mackenzie Ltd.

Rosneft has said it continues to consider China as a strategic market and that it would supply its term contracts based on the agreed timing and volumes to CEFC.

The Russian oil major last year signed a five-year contract to supply 12 million tonnes of oil per year to the Chinese firm.

Glencore would also keep its long-term crude offtake agreement with the Russian producer under the new arrangement, a source said.

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