As the oil crisis continues with prices still hovering low, despite OPEC efforts to stabilize them, Oil exporting countries like Russia are facing the heat as their cash dries up.
As part of the measures taken to inject some much-needed money back into the economy, Russia agreed to sell a part stake of 19.5% in Rosneft.
The stakes have been acquired jointly by Qatar and Glencore, a commodities group, for a sum of 10.5 billion Euros. The deal has been finalized and a meeting took place between Russian President Vladamir Putin and Rosneft CEO Igor Sechin where Putin asked the details of the cash payments.
Russia is battling an economic slump due to the oil crisis, which brought back nearly 50% of the government revenues back in 2014. In 2016, the figure has fallen down to almost 37%, signaling a huge loss of revenue. Drastic actions are being taken to stabilize the fledgling economy which includes selling partial or full stakes of some of its most profitable companies. The Rosneft deal is part of the same initiative.
Glencore will only be contributing $300 million in the stakes acquisition while the remaining requirement will be met by the Qatar Investment fund. Glencore’s involvement in the deal comes as the QIA is its single biggest shareholder and it wants Glencore to stabilize its financial condition with returns from the Rosneft Investment.
Glencore is in a relatively sensitive financial situation, having come out of its own cash issues just last year.
Rosneft is a high stake organization for the Russian Government as it currently supplies nearly 40% of total Russian Production. Even after this deal, Russia still holds 51% shares in the oil giant, maintaining its authoritative majority in the company.
British Petroleum is the other company having any significant amount of stakes in Rosneft, with 20% shares residing currently with BP.
“We will receive the first money transfers from our foreign investors in the next few days,” Sechin replied.
Rosneft CEO Sechin replied to the queries put forward the Russian President on how long will it take to complete the cash transfers into Russian coffers.