Page 16 - FSUOGM Week 02 2021

FSUOGM INVESTMENT FSUOGM

Trafigura taps $7bn Russian

loan for Vostok Oil deal

RUSSIA COMMODITIES trading giant Trafigura has Rosneft told Bloomberg the deal marked
tapped a Russian bank for a $7bn loan to fund its “a logical extension” of the pair’s co-operation
The implication is that investment in Rosneft’s Vostok Oil megaproject and would give Trafigura “long-term access to
Trafigura paid the same in the Russian Arctic, Bloomberg reported on high-quality hydrocarbons to be produced with
amount for the stake as January 5. a low-carbon footprint that can be shipped both
its book value. Rosneft announced on December 29 it had to the west and east.”
completed a 10% stake sale to Trafigura, first The last major investment by a trader in the
agreed in November. But neither company dis- Russian oil sector was by Glencore, which in
closed the deal’s value, although Trafigura said it 2016 teamed up with Qatar’s sovereign wealth
was funded through long-term debt financing. fund to invest $11bn in Rosneft, supported by
In corporate filings in Singapore, however, Russian banks. Glencore swiftly transferred its
Trafigura reported obtaining a €5.775bn ($7bn) interest to Qatar, earning a significant profit in
loan facility with the Credit Bank of Moscow the process.
on December 23, shedding light on the scale of Trafigura could similarly be looking to enter
Vostok Oil's deal. The implication is that Tra- the project early with a mind to selling it on to
figura paid the same amount for the Vostok Oil another investor at a later stage. Alternatively, it
stake as its book value. It also puts Vostok Oil’s could keep the position, which would establish
overall value at $70bn, exceeding Rosneft’s entire the company as a major oil producer at a time
market capitalisation of $62bn. when many investors are reluctant to commit to
Vostok Oil comprises a cluster of oilfields in new projects because of the market’s weak state.
Russia’s far north that Rosneft CEO Igor Sechin As for Rosneft, bringing on board a respect-
has said could yield 1mn barrels per day of oil able international name like Trafigura should
by 2027 and eventually more than 2mn bpd. help it find additional investors. Having had dif-
Trafigura’s purchase marks its biggest-ever deal, ficulty closing new deals with Western partners,
and the largest single investment in Russia’s oil the Russian oil giant has mostly relied on India
and gas industry in recent years. Investment in and China for project investment in recent years.
the Russian upstream has been sapped by low oil Analysts at Bank of America Merrill Lynch
prices and Western sanctions. have described Vostok Oil as one of the biggest
Trafigura and Rosneft are already close part- oil ventures in decades, noting it “could rival in
ners, with the trader responsible for the bulk of scale the oil developments of Western Siberia
the producer’s sea-bound oil exports. They are and Volga Urals regions in the 1960s.” If a suc-
also partnered at Nayara Energy, a joint venture cess, the project will ensure Russia remains a top-
that owns India’s second-largest refinery in Vad- tier oil producer for decades to come. Rosneft’s
inar, with a throughput capacity of over 400,000 Sechin has suggested it could also yield as much
bpd. The plant could be a potential recipient for as 50mn tonnes per year (tpy) of LNG produc-
Vostok Oil’s supplies. tion in the future. ™

P16 www. NEWSBASE .com Week 02 13•January•2021