ROSNEFT & MORGAN STANLEY: NO GUARANTEES
Morgan Stanley 's deal to sell an oil trading business to Rosneft , the state-owned Russian oil group, is close to collapse amid the profound chill in relations between Russia and the US.
Morgan Stanley said on Friday: "In the current environment there can be no assurance that the transaction will close, especially in light of the existing contractual requirement that all necessary approvals be received by year end."
"We are continuing to operate the business in the ordinary course, and should the deal not close, we would consider a variety of options that take into account the interests of our shareholders, clients and employees."
People familiar with the matter said the prospects for a deal were all but dead and that rival bidders were considering a move for the assets.
Struck last December, before Russia's incursion into Ukraine caused relations with the west to plunge, the sale was an attempt by Morgan Stanley to dispose of a non-core business, which is being squeezed by US regulations.
The deal is not directly targeted by US-imposed sanctions, but Rosneft and its Kremlin-linked chief executive Igor Sechin have been affected.
The Committee on Foreign Investment in the United States (Cfius), an inter-governmental group whose members include the defence secretary and secretary of state, has a veto right over the deal.
But the deal expires at the end of the year if it has not gained the necessary regulatory approvals.
Cfius has not given a decision on the sale but people familiar with the matter suggested it would be in the interests of both Washington and Morgan Stanley for the deal to expire – a quieter alternative to a politically sensitive approval or veto.
Rosneft, meanwhile, has been hit by US sanctions, which restrict the company's ability to raise money in dollars. Analysts and rival traders say that makes the Morgan Stanley business unviable for Rosneft.
Oil trading is highly capital intensive and traders rely heavily on access to bank funding. But western banks have stepped back from lending to Rosneft since the US sanctions were imposed in July.
Morgan Stanley has been trying to sell the business for several years but previous attempts, including talks with Qatar's sovereign wealth fund, foundered.
However, people in the industry said several potential bidders had expressed renewed interest after some oil grades went into "contango", meaning prices for later delivery are higher than near-term prices. That condition is necessary for the division to make strong profits.
Rosneft, which has consistently claimed that work on the deal was proceeding as normal, declined to comment.
|June, 22, 13:40:00|
|June, 22, 13:35:00|
|June, 22, 13:30:00|
|June, 22, 13:25:00|
|June, 22, 13:20:00|
|June, 22, 13:15:00|
U.S. EIA - Venezuela holds the largest oil reserves in the world, in large part because of the heavy oil reserves in the Orinoco Oil Basin. In addition to oil reserves, Venezuela has sizeable natural gas reserves, although the development of natural gas lags significantly behind that of oil. However, in the wake of political and economic instability in the country, crude oil production has dramatically decreased, reaching a multi-decades low in mid-2018.
U.S. BEA - The U.S. current-account deficit increased to $124.1 billion (preliminary) in the first quarter of 2018 from $116.1 billion (revised) in the fourth quarter of 2017, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit was 2.5 percent of current-dollar gross domestic product (GDP) in the first quarter, up from 2.4 percent in the fourth quarter.
WNN - There are 126 operational power reactors in 14 EU Member States, providing more than one-quarter of the bloc's total electricity production. In its Communication on the Nuclear Illustrative Program (PINC) published last year, the European Commission expects nuclear to maintain its significant role in Europe's energy mix up to 2050. This would require investment of some EUR40-50 billion (USD46-58 billion) in nuclear LTO by 2050.
REUTERS - Benchmark Brent crude LCOc1 was up 50 cents at $75.58 a barrel by 0835 GMT. U.S. light crude CLc1 was 50 cents higher at $65.57.