Russian government-owned oil company Rosneft (LON:ROSNq) has recently announced that it would be selling shares worth $11.3 billion or 10.5 billion euros or 19.5% of its stakes to Glencore (LON:GLEN), a multinational commodity trading and mining company based in Switzerland alongside the sovereign wealth fund of Qatar.
A summary of the meeting, which was released on the Kremlin's website showed that Russian President Vladimir Putin is eager for the deal to be finished fast as Rosneft Chief Executive Igor Sechin stated that the money to be used in the transaction would be received by the company in the next couple of days.
The deal comes at a crucial time for Russia as the country has been facing an economic decline due to the plunge in oil prices and Western sanctions. The country has dealt with the blow softening its impact through selling some of Russia's stakes in their most valued businesses.
The deal is to fund the Russian government another $11.3 billion in aid of their diminishing funds caused by the wars, particularly in Syria and Ukraine. Russia is also currently struggling to comply with other payables such as public-sector payrolls and pension payments. The deal is to be the foundation of the Russian government's privatization program to lessen their budget shortage.
Rosneft currently produces 4.7 million barrels of energy and oil per day. The company is also known to be the world's largest publicly traded oil company.
This cleared the notion that no investors would dare to buy shares in the assets of the country due to the Western sanctions against the country. The impending end of the year also surprised some analysts and experts as they have expected that no investor would venture into buying shares from Russian assets.
There was also a lack of potential buyers and investors for the shares of the oil company which is the largest traded asset in the earlier parts of the deal which was largely caused by the sanction from the United States two years ago to Russian companies including Rosneft.
The sanction putting a limit to the use of American technology in drilling offshore and shale oil deposits was brought about then by Russia's interference with the eastern Ukraine war.
According to a statement from Glencore, the deal is currently in the final stage of negotiations. Glencore also stated that on top of the original purchase deal, another 300 million euros or $323 million would be contributed by the company with the rest of the payment coming from Qatar.
The deal is set to give Glencore access to 220,000 more barrels of oil to trade each day from Rosneft.