Glencore and Qatar buy 20% stake in Russia's Rosneft for €10bn
Anglo-Swiss commodities giant Glencore is part of a consortium that is poised to buy a 19.5% stake in Russia’s largest oil company Rosneft for €10.2bn, as part of the Kremlin’s strategy to raise funds after a fall in commodity prices.
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Glencore and the Qatar Investment Authority are in the final stage of negotiations to buy the interest, joining oil giant BP, which already owns a 19.75% interest, while Moscow will maintain a controlling stake.
Glencore will pay €300m in equity and the rest will be paid in shares from Qatar Investment Authority and by a non-recourse bank financing.
As part of the deal, the company will have a new five-year offtake agreement for an additional 220,000 oil barrels per day for the Glencore marketing business, and also have opportunities for further partnerships in infrastructure, logistics and global trading.
Russia needs to plug a hole in its budget after low oil prices and economic sanctions sent its economy into a two-year recession.
Glencore has also been dealing with low commodity prices which left it in $30bn in debt and it only recently announced it will resume paying dividend payments in the first half of 2017 after suspending them in 2015.
Other than a 0.54% indirect equity interest in Rosneft, the company will not have any economic exposure to its interests in the shares.
The deal has a limited liability structure and is fully ring-fenced and non-recourse to the company, apart from the €300m equity contribution.
Bank of America Merrill Lynch's rough calculation foresaw around $80m in annual trading profits from 220,000 barrels per day for Glencore from the deal.