Share sale boosts Russian oil giant's global position

Subject

Rosneft's privatisation.

Significance

The sale of a 19.5% government stake in oil giant Rosneft to the Qatari Investment Authority (QIA) and commodity trader Glencore, announced on December 7, was the year's largest global hydrocarbons acquisition, and the largest foreign investment in Russia since the onset of economic crisis and the imposition of sanctions in 2014. The deal came amid diminishing hopes that the Rosneft privatisation would go through this year, and is being seen as a success for company head Igor Sechin as well as President Vladimir Putin. Rosneft gains new strategic alliances while the government retains control of the company.

Impacts

• The Rosneft share sale points to revived investor interest in Russia.
• Coinciding with the OPEC deal, the sale strengthens Russian economic ties and political influence in the Middle East.
• The participation of European entities will increase pressure for EU sanctions to be dropped.