ROSNEFT NEED $49 BLN
Rosneft is looking for some financial relief from Russia's sovereign wealth fund.
Russia's largest state owned oil driller is currently banned from obtaining loans from Western lenders greater than 90 days due to sanctions. So the oil giant asked for $49 billion from the national wealth fund instead.
The move is not a surprise, however. Vladimir Putin said earlier this month at the Russia Calling investor conference that the government would allow for sanctioned companies to tap capital from the national wealth fund if it was in need of funding.
Earlier this week, Russia's Finance Minister, Anton Siluanov, said that Rosneft consulted with the government to gain access to the funding scheme because sanctions had closed doors to its traditional lenders.
"Rosneft has asked the government for financial assistance in light of sanctions against Russia's energy sector," Siluanov told reporters in Moscow.
Rosneft is using the funds to help service a $55-billion debt. Last week, Wall Street Journal reported that Rosneft was considering taking the U.S. and European Union to court over the sanctions, which have also blocked Rosneft imports of European equipment used in oil and gas drilling.
The E.U. and U.S. sanctioned the Russian economy in March following the annexation of Crimea, a Black Sea peninsula that was once an autonomous region of Ukraine. Sanctions became harsher in July when Washington and Brussels banned long term financing and business relationships with Russian oil and gas producers, which included buying and selling equipment used in exploration and production.
Rosneft shares have been resilient in the aftermath, outperforming the Market Vectors Russia (RSX) exchange traded fund by wide margins. Rosneft is down 9.58% while the Market Vectors Russia ETF is down 20.05%.
Rosneft's long-term bank loans are priced in dollars and partially secured by oil export contracts. Accounts receivable outstanding amounted to 21 billion rubles by the end of the second half, according to Rosneft's filings with the local securities exchange.
In March 2014, Rosneft drew down 12.5 billion rubles in funds under a long-term fixed rate loan agreement with a Russian bank. The loan is due in the first quarter of 2017. In February-March 2014, Rosneft partially repaid two long-term unsecured loans totaling $5.52 billion from a group of international banks to finance the acquisition of TNK-BP, including $760 million in upfront payments. Rosneft has 142 billion rubles in cash and cash equivalents going into the second quarter, down the 275 billion rubles that it ended with in Dec. 2013.
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