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Italian bank Intesa to help fund Rosneft deal for Glencore and Qatar - sources

Published 08/12/2016, 10:52
© Reuters. A worker is seen at the central processing facility of the Rosneft-owned Priobskoye oil field outside the West Siberian city of Nefteyugansk
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LONDON/MOSCOW (Reuters) - Italian bank Intesa Sanpaolo (MI:ISP) is expected to provide a large chunk of funds to a consortium of Qatar and commodities trader Glencore to finance their purchase of a stake in the Kremlin oil major Rosneft, two sources familiar with the transaction said.

Russia said on Wednesday it had sold a 19.5 percent government stake in Rosneft (MM:ROSN) for 10.5 billion euros (£8.93 billion) to Qatar's sovereign wealth fund and Glencore (L:GLEN).

Glencore said it would finance part of the deal by putting up 300 million euros of its own equity, with the rest being financed by the Qatar Investment Authority and by non-recourse bank financing.

QIA and Intesa declined to comment. Intesa was one of the advisors to Rosneft on the privatisation.

The sale of Rosneft's stake, announced on Wednesday by Russian President Vladimir Putin and Rosneft's chief Igor Sechin, confounded expectations that the Kremlin's standoff with the West would scare off major investors.

The deal suggests the lure of taking a share in one of the world's biggest oil companies outweighs the risks that come with Western sanctions imposed on Russia over the conflict in Ukraine.

"We have once again seen that Russian assets, especially leading assets, are of great interest for investors inside and outside Russia," Kremlin spokesman Dmitry Peskov told reporters.

The transaction pointed to a possible reassessment by foreign investors of the risks of dealing with Russia, at a time when the election of Donald Trump as U.S. president has heightened expectations of a thaw between Moscow and Washington.

The deal was announced days after Russia and OPEC - dominated by Saudi Arabia and its allies Qatar, the UAE and Kuwait - agreed to coordinated output cuts to support oil prices, the first time they have cut in tandem in 15 years.

State-owned Rosneft had kept the deal, which is meant to help Russia boost its budget revenues, a tightly-guarded secret.

The Italian government, banks and firms have long standing relationships with Russia, although ties have cooled somewhat since the times of former Italian Prime Minister Silvio Berlusconi, who called Putin a friend.

The involvement of Qatar in a Russian privatisation deal comes as a surprise, especially given years of tensions over Syria, where Russia is effectively fighting a proxy war with Saudi Arabia and Qatar.

The Kremlin said on Thursday the Rosneft deal was purely commercial and not political.

"There were not and there aren't any political aspects here," Peskov, the Kremlin spokesman, told reporters on a conference call when asked if any agreements on Syria were part of the talks.

© Reuters. A worker is seen at the central processing facility of the Rosneft-owned Priobskoye oil field outside the West Siberian city of Nefteyugansk

The Kremlin was not involved in preparatory work on the deal, which was handled personally by Rosneft chief Igor Sechin and his team, Peskov said.

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