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Posts Tagged ‘Vankorneft’
October 12th, 2016

Privatization, Sechin-style

Igor Sechin. Photo by Alexander Demianchuk/Reuters

Igor Sechin. Photo by Alexander Demianchuk/Reuters

As it often happens in movies, a multi-episode crime thriller entitled Bashneft that began in September 2014 with the arrest of the once-mighty Vladimir Yevtushenkov, head of the Sistema corporation, has ended in a prosaic finale that we had predicted from the very beginning: Bashneft has been expropriated from private owners and is being transferred to the state-run Rosneft. Despite public protests by ministers and even the deputy prime minister of Russia, the all-powerful Rosneft chairman Igor Sechin got what he wanted: Prime Minister Medvedev signed an ordinance providing for the sale of the controlling stake in Bashneft to Sechin’s oil empire for $5 billion — without any tender. This is $300 million above the minimum price that the government was prepared to accept for the privatization of its shares in Bashneft, which prompted Putin to observe that Russia’s deficit-ridden budget is in dire need of this money. The federal budget will now undoubtedly receive it, but this leaves the question of where Rosneft had gotten it from, since almost 70 percent of its own shares belong to the Russian state.

As the result of sanctions imposed by Western countries in response to the annexation of Crimea and the shooting down of the Boeing by a Russian missile, Rosneft is practically unable to borrow on the international capital markets. Consequently, just as with the purchase of assets of the Yukos Oil Company that had been forcibly expropriated from private investors and bankrupted, Sechin went to look for money in the East — and found it there in exchange for oil. The only difference is that Chinese companies got guaranteed oil supplies from Rosneft for a fixed low price for several years in exchange for the billions of dollars used for >> Read more