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Vitol in discussions with Rosneft over additional USD 2bn loan

04th March 2014

The current deal would contribute to Rosneft’s financial strength and would enable Vitol to strengthen its position in the Russian oil market

Vitol is a Swiss-based but Dutch-owned international energy and commodity trading company

Vitol, a Swiss-based but Dutch-owned international energy and commodity trading company, is involved in talks to extend an additional USD 2bn in financing to Rosneft, giving the Russian state oil company additional funds to expand, the FT has reported.

Last year, Vitol and Glencore agreed to provide Rosneft with USD 10bn to help it finance the procurement of TNK-BP, Russia’s third biggest oil producer. In exchange, the trading houses received an assurance of future oil supply, which has made it one of the largest oil trading deals in history. In addition to the purchase of TNK-BP, the company bought Itera and Sibneftegas, two Russian gas producers.

The current deal, which is still being settled, would contribute to Rosneft’s financial strength and would enable Vitol to strengthen its position in the Russian oil market.

At this point, the negotiations have not been affected by the situation in Ukraine. While Rosneft’s shares decreased by 4.1 per cent, it is doing better than the rest of the Russian market because of increasing oil prices.

The company has already received the first part of a USD 70bn prepayment oil deal with China.

Igor Sechin, Rosneft’s president, emphasized, “We will spend these funds on strategic projects,” but analysts and investors believe that the company had further acquisitions planned.

Rosneft revealed that it was “now working on two deals with longstanding reliable partners.”

“The deals imply entering into long-term (five-year) contracts on a partial prepayment basis,” the company added. “The prepayment size and terms are at present being discussed by the parties and will be agreed on market conditions.”

 

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