Rosneft Struggles To Grow As Sanctions Hit Russia's Oil Champion

The firm, which alongside gas monopoly Gazprom is a top contributor to the Russian budget, needs to invest heavily to bring new east Siberian fields online - a costly endeavour now made more difficult by the sanctions squeeze.

In a sign of the challenge such a project now presents, Putin said last week Rosneft would welcome China buying a stake in the prized Siberian Vankor field. It was a major about-turn given the Kremlin's long resistance to allowing its powerful neighbour access to such deposits.

"Rosneft's decision to offer China a stake in the mega Vankor oil field in East Siberia signals that Moscow's bargaining position has been further weakened by sanctions and that it needs the capital infusion," said Emily Stromquist, analyst at Eurasia.

"Credit Stopped"

Rosneft needs to invest more than $21 billion annually until 2017 to launch new fields and upgrade refineries.

It also needs to repay $12 billion by year-end and another $17 billion next year, after it borrowed heavily to buy rival TNK-BP for $55 billion last year – a deal that included BP taking a 20 percent stake in Rosneft.

Rosneft should be able to access some of the money it needs from short-term credit lines via Western banks as the United States sanctions only prohibits them from providing loans with maturity longer than 90 days.