Page 6 - FSUOGM Week 13

FSUOGM COMMENTARY FSUOGM
Rosneft sheds
Venezuelan business
as US sanctions loom
The transaction means that the Russian state is no longer Rosneft’s majority shareholder
RUSSIA
WHAT:
Rosneft has sold its Venezuelan operations to a 100% state-owned Russian firm.
WHY:
The oil company wants to avoid US sanctions.
WHAT NEXT:
It appears that the deal means that the Russian state, for the first time, is not the majority shareholder of Rosneft.
RUSSIA’S largest oil company Rosneft announced on March 28 that it had sold all its operations in Venezuela to a company wholly owned by the Russian government – a move aimed at shielding its business from US sanc- tions. In return, Rosneft has receive a 9.6% stake of its own equity, meaning that it is no longer under the majority control of the Russian state.
Rosneft is a major oil producer in Venezuela and has been helping the crisis-struck Latin American country export its crude, in violation of US sanctions. This has provided an economic lifeline to the regime of Venezuelan President Nicolas Maduro, allowing it to maintain a flow of hard currency.
These activities have not gone unnoticed by Washington, which this year slapped sanctions on two Rosneft subsidiaries, Rosneft Trading and TNK Trading International. It is understood that the pair took more than a third of Venezue- la’s oil exports in 2019, reselling the supplies to customers mostly in the Asia-Pacific area.
Rosneft said in a statement that it had
transferred its entire Venezuelan business, including its joint ventures with Venezuela’s state-owned PDVSA and its oilfield services, commercial and trading operations, to a 100% state-owned Russian company. In return, it will receive a 9.6% share of its equity capital – which would be worth RUB308bn ($3.9bn) on the Moscow stock exchange as of March 27. This share will be held by a Rosneft subsidiary.
Rosneft did not name the company that had acquired its assets, nor which of its shareholders was responsible for transferring the 9.6% stake. However, the oil producer’s majority shareholder is Rosneftegaz, a wholly government-owned energy holding firm, with a stake of slightly above 50%. Rosneftegaz also has shares in Rus- sia’s largest gas producer Gazprom and power generation firm Inter RAO, as well as other key Russian state companies. Sources confirmed to Reuters on March 30 that Rosneftegaz was indeed the other party in the deal.
Rosneft’s other main investors are BP with 19.75% and Qatar via QH Oil Investments with 18.93%.
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w w w . N E W S B A S E . c o m Week 13 01•April•2020