Qatar, Glencore acquire US$11.3 bn interest in Russia’s Rosneft

The sovereign wealth fund of Qatar along with Switzerland-based multinational commodity trading and mining company Glencore have together purchased a 19.5% stake worth US$11.3 billion in Russia’s largest state-owned oil company, Rosneft.

Russian President Vladimir Putin calls the agreement “the largest privatization deal, the largest sale and acquisition in the global oil and gas sector in 2016”.

British multinational oil and gas company BP also owns 19.75% interest in Rosneft, while Moscow will keep the controlling share.

The long-planned sale is part of the Russian government’s efforts to sell some state assets to help balance the budget amid a two-year recession caused by a drop in global oil prices and Western sanctions.

The deal also marks a turnaround for Glencore, which had seen a collapse in its share price amid a plan to sell assets and cut its huge debts.Glencore’s shares have rebounded this year. The Qatar Investment Authority is one of the biggest investors in Glencore.

Speaking at a televised meeting with Rosneft chief executive Igor Sechin, Putin noted that the deal follows a rally in global oil prices after the decision to cut production has been made by the Organization of the Petroleum Exporting Countries (OPEC).

Although not a member of OPEC, Russia has also agreed to cut its output in line with the cartel, and will attend a meeting with its member countries on December 10 to discuss specific details.

Sechin said that Glencore and the Qatari fund will form a consortium and have equal stakes. He added that Rosneft had conducted talks with more than 30 potential bidders before striking the deal.

Glencore said in a statement that it would finance part of the deal by putting up EUR300million of its own equity, with the rest financed by banks and by the Qatari sovereign fund.

The commodities trader stands to benefit by gaining access to Rosneft’s crude output, while Qatar will further establish itself as a major investor in some of the world’s biggest businesses.