Russia aiming for over $11 billion from Rosneft stake sale

Fri Sep 2, 2016 8:40am EDT
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By Denis Pinchuk and Dmitry Zhdannikov

VLADIVOSTOK, Russia (Reuters) - Russia hopes to fetch more than $11 billion for a minority stake in the Kremlin's flagship oil producer Rosneft before the end of the year to plug budget holes caused by low crude prices, an industry source told Reuters on Friday.

The sale will be complicated by sanctions imposed on Moscow over its actions in Ukraine and by many investors' wariness of putting money into Russia as well as volatile commodity markets.

But Russia is hoping to repeat the success of Rosneft's initial share offering a decade ago when it raised $11 billion in one of the world's biggest such sales, despite concerns that investors would be spooked by Rosneft's purchase of most of the assets of oil firm YUKOS, bankrupted by the Kremlin.

On Friday, Economy Minister Alexei Ulyukayev said his ministry had received documents needed to kick start the sale of 19.5 percent in Rosneft, including a valuation and proposals on terms of sale.

An industry source familiar with the sale process said the stake had been valued at over $11 billion. The documents were submitted this week by Rosneftegas, which controls Rosneft on behalf of the government. Italian bank Intesa is advising Rosneftegas on the sale.

In comments to Russian news agencies later on Friday, Ulyukayev said estimates the stake would be valued at around $11 billion were close to reality.

After privatization, the government will keep 50 percent plus one share in Rosneft, the world's largest oil firm by reserves among listed companies.

Rosneft produces over a third of Russia's total output of 10.7 million barrels per day - a figure making Russia the world's biggest producer on a par with Saudi Arabia and the United States.   Continued...

The logo of Russia's Rosneft oil company is pictured at the central processing facility of the Rosneft-owned Priobskoye oil field outside the West Siberian city of Nefteyugansk, Russia, August 4, 2016. Picture taken August 4, 2016. REUTERS/Sergei Karpukhin