Rosneft Inks Oil Deal; $16.8 Billion Loan To Buy TNK-BP

Rosneft Inks Oil Deal; $16.8 Billion Loan To Buy TNK-BP

Rosneft’ NK OAO (MCX:ROSN) signed a prepaid, long-term crude supply agreement with Glencore International Plc (LON:GLEN) and Vitol Group to supply a total of 67 million tons of crude for 5 years starting next year.

In addition, Rosneft’ NK OAO (MCX:ROSN) secured two loan agreements with a total amount of $16.8 billion from a group of international banks to purchase 50 percent stake in TNK-BP.

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According to Igor Sechin, president and chairman of the management board of Rosneft’ NK OAO (MCX:ROSN), the price formula in the agreement is in line with the prices the company receives for crude at medium-term tenders. The agreement also serves as a solid foundation for a “long-term and mutually beneficial cooperation” between the three companies.

Regarding Rosneft’s loan agreements, Sechin said, “The Company has reached an understanding with leading international financial institutions in the domain of its strategic projects. We would like to thank our financial partners for prompt decision-making ensuring the completion of the deal unprecedented for the Russian market. We wish our partners success in the new year.”

Rosneft’ NK OAO (MCX:ROSN) secured a five year loan of $4.1 billion and a two year loan of $12.7 billion from international banks, including Bank of America (NYSE:BAC) Merrill Lynch, Barclays PLC (LON:BARC) (NYSE:BCS), BNP Paribas SA (PINK:BNPQY) (EPA:BNP), JPMorgan Chase & Co. (NYSE:JPM), Mizuho Corporate Bank among others.

According to Alexei Kokin, senior analyst at UralSib Capital, Rosneft’s transaction to supply crude for five years is maybe around $50 billion, assuming the price for oil is $100 per barrel.

“It’s not a coincidence that we’re hearing about these at the same time. Rosneft is interested in trade financing and can use these contracts to secure additional bank loans,” added Kokin during a telephone interview with Bloomberg.

Rosneft’ NK OAO (MCX:ROSN) will become the world’s largest publicly traded oil company after completing its transaction to acquire TNK-BP. BP Plc (NYSE:BP) (LON:BP), the deal was agreed to buy 50 percent stake in TNK-BP for $17.1 billion.