ROSNEFT SELLS STAKES
Rosneft is to sell stakes in two major assets to Indian companies in deals that could raise as much as $4bn for the Russian state-controlled oil group, which is struggling under a hefty debt burden and western sanctions.
The deals, announced on Wednesday after a visit to New Delhi by Igor Sechin, Rosneft's chief executive, are the latest sign that the Russian company is willing to sell equity in some of its most prized resources to foreign investors in order to raise money to finance their development.
Rosneft said on Wednesday it had signed a binding agreement to sell a 29.9 per cent interest in its Taas-Yuriakh subsidiary, which operates one of the largest oil and gasfields in eastern Siberia, to a consortium of three Indian companies: Oil India, Indian Oil and Bharat Petroresources.
Separately, Rosneft signed agreements envisaging the possible sale of a 23.9 per cent interest in Vankor, one of its largest oilfields and also in eastern Siberia, to the same group of Indian companies, as well as a possible increase in the stake held by India's Oil and Natural Gas Corporation from 15 to 26 per cent.
One person close to the Russian company confirmed the valuation of Rosneft's subsidiaries under the deals outlined on Wednesday would be in line with stake sales agreed last year.
In 2015, Rosneft completed a deal to sell 20 per cent of Taas-Yuriakh to BP for about $750m. It also agreed to sell 15 per cent of Vankor to ONGC for about $1.3bn.
That implies that latest sale involving Taas-Yuriakh is worth $1.1bn, and that Rosneft could raise an additional $2.9bn if the agreements to sell further stakes in Vankor are completed.
Mr Sechin said the sale of equity in Taas-Yuriakh to foreign companies would "allow a significant acceleration of the upstream projects' implementation" by increasing the "financial potential" of the subsidiary.
He added that the Vankor deal marked "the turning of a new leaf in the co-operation between Russia and India in the energy sector".
Dharmendra Pradhan, India's oil and gas minister, described the agreements signed on Wednesday as "a remarkable achievement", demonstrating the level of partnership between the two countries.
Vankor is one of the jewels in Rosneft's crown: it is the company's third-largest producing subsidiary and its largest oil and gasfield developed in the past 25 years.
Analysts at VTB Capital said the deals with India were a positive step for Rosneft. They come after Rosneft last September signed preliminary agreements to sell equity in several projects to Chinese companies.
But deals with China have been slower to materialise than those with India: the Russian company has held talks with Chinese investors to sell stakes in both Taas-Yuriakh and Vankor in the past, but no agreements were concluded.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.