MOSCOW/LONDON, Feb 15 (Reuters) – Glencore (GLEN.L) has bought out of Russneft (RNFT.MM), capping 20 years of investments which noticed the Swiss commodities agency buying and selling hundreds of thousands of barrels of the Russian group’s oil even because it witnessed a few of Russia’s high company and political battles.
The sale, which has been years within the works since Glencore noticed a high administration reshuffle, was executed in December 2021 and can shut within the first half of 2022 pending regulatory approvals, Glencore mentioned.
Glencore bought its stake in Russneft, as a result of it was not materials to its enterprise, CEO Gary Nagle mentioned whereas commenting on the buying and selling agency’s annual outcomes.
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Glencore didn’t disclose the client or the worth of the transaction. Russneft declined to remark.
The sale, nonetheless, coincides with among the worst tensions between Moscow and the West because the finish of the Chilly Struggle and as some Western corporations search to cut back publicity to Russian property.
Glencore doesn’t have main issues about its Russian investments as they’re “immaterial”, mentioned Nagle, when requested about rising tensions between Russia and Ukraine, however added: “If there’s some kind of exercise within the Ukraine and Russia, it can trigger extreme disruptions in varied commodity markets”. learn extra
Russneft, which produces some 130,000 barrels per day, has confronted robust instances since its former proprietor Mikhail Gutseriyev was sanctioned by the European Union final 12 months for shut hyperlinks with Belarussian President Alexander Lukashenko.
Sanctions created difficulties for Russneft’s export oil gross sales, with Glencore skipping purchases for a number of months. learn extra
“Glencore’s exit from Russneft is an indication of worsening funding local weather, but it surely would not essentially set a precedent for different international traders to promote their stakes in Russian corporations”, Dmitry Marinchenko, senior director at Fitch Rankings informed Reuters. Fitch presently doesn’t fee Russneft.
Glencore had helped Gutseriyev construct Russneft from scratch because the early 2000s right into a top-10 Russian oil agency by funding the agency’s enlargement in return for oil export rights.
The deal allowed Glencore, one of many high three international oil merchants, to market giant volumes of Russian oil.
Glencore remained a shareholder in Russneft throughout a long time of turbulence surrounding the agency, together with Gutseriyev shedding management, fleeing Russia to London in 2007, and returning residence later to grow to be a loyal Kremlin accomplice once more.
Different challenges included Russneft’s billions of {dollars} of debt to Russian state banks, in addition to bankruptcies at different monetary establishments based by Gutseriyev.
“Glencore chooses the suitable time to exit Russneft as oil costs are good, whereas the asset is sort of dangerous”, a supply with a buying and selling agency concerned within the Russian oil market mentioned.
Glencore’s publicity to Russia is getting smaller as the brand new guard of Chief Government Gary Nagle and head of oil Alex Sanna are reshaping the corporate after a long time of management by Ivan Glasenberg and Alex Beard, who had nearer ties with Moscow.
Glencore’s five-year provide cope with Russia’s high oil agency Rosneft (ROSN.MM) expired final 12 months, though the Swiss agency continues to be loading Russian gasoline because the winner of Rosneft’s common crude and merchandise tenders. learn extra
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Reporting by Olga Yagova, Dmitry Zhdannikov, extra reporting by Helen Reid; enhancing by Jason Neely
