Russian Oil Giant Seeks Funds Earmarked For Pensions

Hess To Form MLP For North Dakota Oil, Gas Transport Assets
Rosneft is seeking a $42 billion loan from a fund earmarked for Russian pensions to help it weather Western sanctions imposed over Moscow's role in Ukraine.

Reuters

MOSCOW, Aug 14 (Reuters) - Russia's Rosneft, which produces more oil than Iraq or Iran, is seeking a $42 billion loan from a fund earmarked for Russian pensions to help it weather Western sanctions imposed over Moscow's role in Ukraine.

Analysts expected the Russian government to turn down the proposal by the world's largest listed oil producer, one fifth owned by BP and run by a close ally of President Vladimir Putin, unless political pressure is brought to bear.

It was one of the most stunning of several proposals for the Russian state to help firms hit by U.S. and European sanctions over Moscow's annexation of Crimea in March and role in subsequent fighting in eastern Ukraine.

A government source said the company had asked the National Wealth Fund to buy 1.5 trillion roubles ($41.6 billion) of its bonds to cover its net debt, but that the cabinet had not yet taken a decision. Rosneft declined to comment.

Most of the $86 billion fund, built up from oil revenues to help finance a growing state pension deficit, has been invested in infrastructure projects to try to boost the economic growth that drove Putin's popularity during his first decade in power.

"The state's financials have little room to accommodate a request for funding on such scale," brokerage Otkritie said in a note. "Enthusiasm to support the country's largest tax payer via a reversal of the cash flow will be limited."

Russia relies on energy for half its budget revenues and needs dozens of billions of dollars to sustain production from new tight oil reserves and Arctic deposits to finance Putin's soaring military and social costs.

Analysts said Rosneft's long term prospects had been hurt by the sanctions but loans from China meant it was in reasonable shape for now.


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