Put Rosneft Privatisation on the Back-Burner: Kudrin

Russia’s former finance minister Alexei Kudrin told the World Economic Forum in Davos last week that the Kremlin should reconsider its plan to sell about a fifth of Rosneft’s shares to help the budget.

“As for oil companies’ privatisation, I would put that on the back burner for a year or a year and a half,” he said, as their value – given the fall in the oil price and in Russian GDP – is now very low. He said it would be more reasonable to use wealth funds now and get much more for these assets later.

By contrast Nick Butler, Chair of the Kings Policy Institute in London, writing in the UK daily Financial Times, argued that the part-privatisation of Rosneft would give the Russian government a breathing space. Despite low oil prices, with 22bn barrels of oil equivalent reserves, a part-privatisation of Rosneft would replenish the national wealth funds which have fallen by one-third in 2015.

As if to underline the precariousness of Russian government finances, in the wake of Davos the present finance minister, Anton Siluanov, said the Kremlin this year would boost revenues by selling a slice of its holding in Rosneft, together with state shares in Sberbank and VTB bank. This announcement follows an earlier Kremlin’s direction to cut its spending by 10%.

The existing, privately-owned shareholder in Rosneft is the UK major BP, with 19.75%, acquired during its sale of its stake in TNK-BP to Rosneft.

Marina Zvonareva

Marina Zvonareva is a Natural Gas Europe journalist focused on Russia’s international energy relations.