Russia is pushing ahead with plans to try to raise over $11 billion through the sale of nearly one-fifth of state oil company Rosneft before the end of the year, President Vladimir Putin said.
Putin said in an interview with Bloomberg News published on September 2 that Moscow is looking to sell a 19.5 percent stake in Rosneft to strategic investors through a private placement rather than through a public securities offering, in an effort to maximize revenue for the government.
"I think we should be aiming precisely for that type of investment. We are getting ready and are planning to do it this year," Putin said.
The Rosneft sale will show Russia’s continued commitment to reducing the state’s role in the economy despite setbacks since 2014 caused by a collapse in oil prices and western sanctions on Russia over its aggression in Ukraine, he said.
“We are committed to carrying out our plans,” Putin told Bloomberg. “The question isn’t whether we want to or not, the question is whether it makes sense or not, and at what moment?”
Rosneft is Russia's most valuable company and its partial privatization would raise considerably more revenue for the cash-strapped government than the sale in July of a 10.9 percent stake in diamond miner Alrosa.
After privatization, the government would retain 50 percent plus one share of Rosneft, which is the world's largest oil firm by reserves and produces over a third of Russia's output of 10.7 million barrels a day.
At its first public offering of securities a decade ago, Rosneft was worth nearly $80 billion. But its market value has fallen to $55 billion since then as a result of low oil prices and the sanctions imposed on Russia, Rosneft, and its chief executive Igor Sechin, who is one of Putin's closest allies.
The sanctions will make it difficult for western investors to purchase a stake in Rosneft, but their place could be taken by Asian investors, including from China and India, which have been seeking to help develop Russia's vast natural resources.
Russia last month postponed the sale of a 50 percent stake in Bashneft, a smaller state oil firm, after Rosneft indicated its interest in joining the bidding, pitting Kremlin insider Sechin against rival bidders and posing a dilemma for Putin.
“Probably it’s not the best option when one company under state control acquires another purely state company,” Putin told Bloomberg.
But he left the door open for Rosneft participating in the Bashneft sale, saying it wasn’t strictly speaking a state company because Britain’s BP owns almost 20 percent of its shares.
“In the end, the important thing for the budget is who gives the most money,” he said. “In this sense we can’t discriminate against market participants, not a single one of them.”