The government is discussing a new scheme of privatization of state shares in the largest Russian oil companies: Rosneft may buy state-owned package of shares, the newspaper “Vedomosti” , citing sources familiar with the discussions.

Scheme arising from difficulties finding buyers for the state, it looks strange, but is actively discussed and in practice, it benefits all parties, said the source familiar with the situation.

700 billion rubles, which the state holding company Rosneftegaz should receive from privatization of “Rosneft” already written in the budget law. It says that “Rosneftegaz” will have to be paid to the state dividend of not less than he received for his shares of “Rosneft” and “Gazprom”.

“The budget need money now and fast to find investors for such a package (19.5% of the shares) will not work – the Chinese are cautious, look at US, the Indians just bought a large oil assets, they need to digest, but European investors will not buy. At the very same “Rosneft” there is money ($20 billion in the accounts – advance payment from the Chinese and the proceeds from the sale of assets), plus they can raise money in the market”, – explains the interlocutor of “Vedomosti”.

Thus, he continues, the budget will receive from “Rosneft” all at once 700 billion rubles, and later Rosneft is in a relaxed mode can sell this package – strategists, Chinese, or Indian, or some type of investment funds BlackRock and Blackstone – and earn on the resale of own package.

Owning own shares is a common practice in the past two months: for example, “LUKOIL” pack of 16% on its own balance sheet, confirms the source, “Vedomosti”.

The company may redeem no more than 10%, but it can buy and “daughter”, there is no limitation.

Recall, Russian President Vladimir Putin announced on state’s decision to sell shares in “Rosneft”, “Bashneft”, VTB to ALROSA and Sovkomflot in early 2016. The privatization of these five companies, according to the Ministry of economic development, can give to the Russian budget of about 1 trillion rubles.

July 8, ALROSA successfully held a secondary public offering (SPO) on the Moscow stock exchange, but after a few months it became clear that other privatization deals this year may not be.

Sale of government’s stake in Bashneft was delayed because of the reluctance of the government to prevent this transaction “Rosneft”, the privatization of Sovcomflot postponed to 2017, and the privatization of VTB group has been postponed indefinitely – in the same way as previously, the government decided to do with Aeroflot and Sberbank.

In terms of privatization of 2016 from large companies remained only “Rosneft”, the government plans to sell 19.5% of its shares in about 700 billion rubles.

In late August, Minister of economic development of Russia Alexei Ulyukayev said that after the cancellation of the sale of state block of shares of “Bashneft” the authorities will try to hold this year’s privatization of “Rosneft”, but there are risks that the budget deficit will have by increasing hozaystvennih.

Initially, the role of a strategic investor was invited to the Chinese, but they asked for extended rights to participate in management of the company, to which Moscow was not ready.
The new idea is to sell the government’s stake in small parts of the oil traders and investment funds. Buyers promises to find an Italian Bank Intesa SanPaolo, which has long been cooperating with Rosneft.

Privatization transactions in the oil industry turned to the state shifting money from pocket to pocket real investors are found, said the publication RusEnegry partner Mikhail Krutikhin. According to him, to sell “Rosneft” these investors will be extremely difficult.

“The shares were offered to the Japanese and the Chinese, and Indians, and Vietnamese, but the interest from potential buyers so far only exists in the imagination of optimistic Russian media. To buy a minority stake, not giving the right real voice in the company, which is meaningless for the sake of consolidation laid a huge share of its future oil production to the Chinese, few committed,” says Krutikhin.



Vedomosti: Rosneft may buy itself 05.10.2016

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