China's CEFC Buys into Russian Oil Giant Rosneft

W300

Swiss commodities trader Glencore said Friday it is selling a major part of a stake it only recently acquired in Russian oil giant Rosneft to Chinese conglomerate CEFC. 

Glencore, which had teamed up with the Qatar's sovereign fund at the end of last year to acquire a 19.5-percent stake in Rosneft, said in a statement that it had now agreed to sell a holding of 14.16 percent on to CEFC.

It did not say why it had decided to sell the shares. 

But Rosneft chief Igor Sechin said the consortium had run into trouble with financing the major part of the stake.

The 14.16-percent holding was "the part of the stake... which were purchased through credit resources from a European bank," Sechin said in televised remarks.

"But volatility on the financial markets led to a serious devaluation of the dollar... and expenditures to service this loan became quite serious."

"Therefore the consortium... decided to find an additional partner," Sechin said.

He hailed CEFC's entry into the share capital as having "strategic importance for the company."

"For us this is a serious development... we are happy that this is a Chinese corporation. We hope that this partner will allow for synergy in the partnership."

The deal leaves Glencore with 0.5 percent and Qatar's fund with 4.7 percent in the Russian oil company. 

Rosneft sold the 19.5-percent stake in late 2016 in a surprise deal as part of Russia's privatization drive.

The purchase price of 10.5 billion euros was shared equally by Glencore and the Qatar Investment Authority (QIA). 

The deal left the Russian state controlling just over 50 percent of the country's largest oil firm. 

Britain's BP is the largest minority shareholder with 20 percent.

Russian President Vladimir Putin had stressed that the controlling stake in the company would remain in the hands of the Russian government.