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Sunday, January 29, 2017

Russia Selling Off Its Crown Jewel? -- January 30, 2017

The price of a Big Mac Combo Meal in New York City: $8.

The price of a Big Mac Combo Meal in Paris: €8.

Current conversion: $1 = €0.93.

About 1:1.

Data points, Russia-Rosneft-Italy-Qatar-Swiss Glencore mega-deal:
  • mega-oil deal: late, 2016, Russia sold almost 20% of its stake in its giant oil company -- Rosneft
  • stake sold for slightly more than €10 billion; valuing Russia's stake in the company (before the sale) at €52 billion
  • Putin: called it the largest sale and acquisition in the global oil and gas sector
  • also one of the biggest transfers of state property into private hands since the early post-Soviet years
  • buyer: Qatar and Glencore
  • Glencore: Swiss oil trading firm
  • Glencore: only €300 million, less than 3% of the purchase price; Glencore said it limited its interest to just half-a-percent of Rosneft; likely to be a Cayman Islands company whose owners cannot be traced
  • public data and "inference" suggests:
  • Qatar: €2.5 billion
  • Glencare: €0.3 billion
  • Intesa (Italian bank) loan: €5.2 billion
  • shortfall: €2.2 billion 
  • the full €10.2 billion traces back to Russia's second-largest bank, state-controlled VTB
If I read that correctly, the government of Russia backed/guaranteed the deal until Intesa's loan arrived (but again, I may be misreading this)

Why is this important?
  • Rosneft: world's largest listed oil company by output; one of two crown jewels of the Russian state;
  • Gazprom: Russia's other crown jewel
  • Qatar (from the article):
  • they like investing in energy
  • they saw the upside in Rosneft
  • they saw the upside in building relations with Russia
  • Russia's role in Middle East politics is only set to rise
As I skim through the milliondollarway articles on Qatar, two things jump out at me:

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