Russia easing control over oil companies

There may be buyers already in place to help privatize some of the largest oil companies in Russia, the country’s first deputy prime minister said.

The Kremlin has been reviewing privatization options as the Russian economy risks lingering in recession because of the strains brought on by Western sanctions and low crude oil prices. In March, Deputy Finance Minister Yuri Zubarev said privatizing state oil company Rosneft could bring in up to $6.5 billion to the federal budget.

Russian Economic Development Minister Alexei Ulyukayev has said the potential also exists to unload the entire government share in state oil company Bashneft.
Russian Deputy Prime Minister Igor Shuvalov now says possible investors have surfaced for both. The sale of Rosneft, he said, translates into budget revenue, something he said is “very advantageous to us if it happens.

“As far as Bashneft is concerned, potential bidders are already in talks with the government,” he was quoted by Russian news agency Itar-TASS as saying Monday.

For Rosneft alone, the minister said the government expects to get about $8 billion through the sale of a 19 percent stake in the oil company. China National Petroleum Corp. may be a potential buyer, the Russian report added. No further information was offered on the possible sale of Bashneft.

Revenue for Russia will help the country overcome economic stress from the weakness in crude oil prices. The International Monetary Fund described Russia’s economy as among the hardest hit by the weakness and, in March, the Russian Central Bank said it was keeping key interest rates steady at 11 percent, pointing to lingering economic pressures from lower oil prices and Western sanctions.

Crude oil prices are lower because supplies far outweigh demand. Rosneft said itsoutput last year was about 1 percent higher than in 2014.

Source: April 25 (UPI)