Qatar and Glencore scrap plan to sell $9bn Rosneft stake to CEFC

Qatar will cement its position as one of the biggest shareholders in Rosneft, Russia’s state-backed oil company, after tearing up plans to sell a $9.1bn stake to CEFC, the mysterious Chinese energy group.

The Qatar Investment Authority, the Gulf state’s sovereign wealth fund, and its partner Glencore, which originally acquired almost a fifth of Russia’s largest oil producer in December 2016, said on Friday they could no longer proceed with a subsequent deal to sell on 14 per cent of the company to the Chinese group. The QIA will instead buy the shareholding itself, making it a top-three investor in the Russian energy giant, which is 50 per cent owned by the Kremlin and run by Igor Sechin, a close ally of Russia’s President Vladimir Putin. The decision to abandon the sale is the latest twist in a saga that has combined a dizzying mix of international politics, high finance and some of the most powerful players in the global oil industry. Ye Jianming , CEFC’s chairman and founder, was detained by Beijing in February after shooting to international prominence with a series of multibillion-dollar deals, of which the Rosneft purchase was the most ambitious.

That deal, however, has essentially been on hold since Mr Ye was detained three months ago, leading to questions over whether Beijing would step in with a state-backed asset manager to acquire the stake in Rosneft, one of the biggest suppliers of crude to China.

That idea appeared to have been quashed on Friday when Glencore, the mining and commodity house led by billionaire Ivan Glasenberg, said it had informed CEFC of its intention alongside the QIA to terminate the $9.1bn sale agreement, which was agreed last September.

Under the new plan, the QIA — which is also the biggest shareholder in Glencore — will now acquire the stake outright, giving the Gulf state stronger ties into Moscow at a time when Russia has become a major player in Middle Eastern politics. Rosneft has often been seen as tool of Moscow’s foreign policy that the Kremlin can wield to help establish its influence.

Rosneft said on Friday that it believed Qatar’s direct ownership of the stake would let them develop joint projects internationally. Glencore and the QIA originally bought a 19.4 per cent Rosneft stake in December 2016 using a special purpose vehicle when the Kremlin was trying to meet a deadline to raise funds.

The QIA kept 4.7 per cent of the stake and Glencore 0.5 per cent, with the rest pledged as collateral against loans from Italy’s Intesa Sanpaolo and Russian state-owned banks. The stake pledged to the banks is the part they agreed to sell to CEFC last year. Proceeds from the sale to the QIA will be used to repay these loans. For Mr Glasenberg’s role in helping to mastermind the deal, Glencore was rewarded with a large oil supply agreement from Rosneft to feed its muscular trading division. Mr Glasenberg also won a seat on the Russian company’s board and was awarded the Russian Order of Friendship by Mr Putin.

The oil supply deal, which gives Glencore 220,000 barrels a day of Rosneft crude over five years, will continue under the latest arrangement, said a person familiar with the company. Glencore will also retain its 0.57 per cent stake in Rosneft, which it acquired as part of the original transaction.


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