Russia have sold a large stake in their largest oil company to Glencore and the Qatar Investment Authority, Russian President Vladimir Putin announced on Thursday.
Commodities trader Glencore and Qatar’s sovereign wealth fund are entering into a deal together to buy the 19.5 percent stake in Rosneft, Russia’s largest oil company. The two companies are paying $11.3 billion for the stake, making them shareholders alongside oil giant BP, who currently owns 19.75 percent. Moscow will still keep the majority stake.
“It is the largest privatisation deal, the largest sale and acquisition in the global oil and gas sector in 2016,” President Vladimir Putin said.
“The transaction was made on an upward trend in oil prices and reflects on the value of the company. In that sense this is a good time.”
Speaking at a televised meeting with Rosneft chief executive Igor Sechin, Mr Sechin said that Glencore and the Qatari fund will form a consortium and have equal stakes, saying that Rosneft had conducted talks with more than 30 potential bidders before striking the deal.
The sale is part of Russia’s plan to balance the state budget, after being heavily hit by the international fall in oil prices and Western sanctions against its biggest export. Glencore have also been heavily hit by the oil rout, but have recently since its share price rise after a stabilisation in oil prices, asset sales and investment from the Qatar Investment Authority.
The Qatar Investment Authority was tipped to be part of the private bailout of Italy’s struggling bank Monte dei Paschi di Siena, but the deal is rumoured to have fallen through after instability provoked by the resignation of the Italian Prime Minister Matteo Renzi.
Glencore (LON:GLEN) shares are currently up 1.26 percent at 300.55 (1135GMT).