Russia may delay Rosneft privatisation: minister

12th November 2013, Comments 0 comments

Russia said on Tuesday it may not cede control of oil giant Rosneft until 2016 despite efforts to shore up the struggling economy through partial sales of big state firms.

First Deputy Prime Minister Igor Shuvalov said the recommendation to push back Rosneft's selloff by at least a year came from "experts" who advise the cabinet on its current three-year $50-billion (37-billion-euro) privatisation drive.

"If earlier we thought this could happen in 2015, then now experts say that it may be better to wait until 2016," the RIA Novosti news agency quoted Shuvalov as saying.

"We have to discuss with our partners the best way and time to privatise (Rosneft)," President Vladimir Putin's economic pointman said.

Privatisation is emerging as a vital source of income for Russia because of its rapidly deteriorating economic base.

The economy expanded by only 1.2 percent in annual terms in the third quarter and is now on track for its worst performance since the 2008-2009 global financial crisis.

But top ministers and other officials have been loath to part with industries over which they excercise control.

The government currently owns a 69.5-percent stake in Rosneft. The world's largest publically-listed crude producer had originally been expected to go mostly private as early as next year.

Privatisation could be a problem for the company because Russian law only allows state-owned energy giants -- Rosneft or the gas firm Gazprom -- to exploit the natural resources of the Arctic region.

Rosneft has since 2011 tied up Arctic exploration agreements with the US supermajor ExxonMobil as well as Norway's Statoil and Italy's ENI.

But Shuvalov suggested that this time Britain's BP may be given a head start in any Rosneft privatisation talks.

The British energy group this year expanded its Rosneft holding to 19.75 percent as part of a deal in which the state firm acquired the Anglo-Russian joint venture TNK-BP.

BP is now Rosneft's largest shareholder after the government and is exploring the possibility of joining Russian onshore energy projects after being shut out of any Arctic deals.

Shuvalov said Rosneft's sale "negotiations will be conducted with existing shareholders, including BP."

© 2013 AFP

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