Russia has sold a stake in oil giant Rosneft for 10.5 billion euros ($11.3 billion) to Qatar and commodities trader Glencore, confounding expectations that the Kremlin's standoff with the West would scare off major investors. Sonia Legg reports.
They're the world's largest commodities trader and it seems opportunities in Russia are hard to resist. Glencore - along with Qatar's sovereign fund - are spending 10.5 billion euros on a near 20 per cent stake in oil giant Rosneft And they're doing so despite the risks that come with Western sanctions imposed over the conflict in Ukraine. (SOUNDBITE) (Russian) PRESIDENT OF NATIONAL ASSOCIATION OF OIL AND GAS SERVICE, VICTOR KHAIKOV, SAYING: "Of course there are recommendations not to work with, or to have minimal contact with Russian companies that are on the sanctioned list. But in this particular case it isn't a problem because one side of the deal is the Qatari sovereign fund and the other is Glencore, a company based in Switzerland, which is not part of the EU." The timing of the announcement - days after Russia and OPEC agreed to coordinate output cuts to support oil prices - is also significant. State-owned Rosneft had kept the deal a tightly-guarded secret until President Putin met Rosneft's chief on Wednesday evening. (SOUNDBITE) (Russian) RUSSIAN PRESIDENT, VLADIMIR PUTIN, SAYING (AUDIO CONTINUES THROUGHOUT WITH CLOSE OF PUTIN AND IGOR SECHIN LISTENING): "This is the largest privatisation deal, the largest sale in the oil and gas sector in the world this year. I very much hope the new investors will improve the transparency of the company, while still leaving us with a controlling interest." Rosneft is being sold as part of a privatisation drive. And Sechin says Glencore and Qatar's Investment Authority will take an equal share. Glencore is putting up 300 million euros of its own equity, the rest will come from banks and Qatar. The chunk of cash will help Russia fill holes in the state budget caused by sanctions and the economic slowdown. Glencore will gain access to Rosneft's crude volumes - at a time when prices should be about to increase.