REPORT
By Emre G├╝rkan Abay
Russia letter, week beginning Dec. 12

- ‘Deal of the year’

Last week, Russia witnessed one of the most important events in the global energy sector.

The country’s oil giant, state-owned Rosneft, signed a deal with the Qatar Investment Authority and commodities trader, Glencore, to sell a 19.5 percent stake in the company for €10.5 billion.

Dubbed by Russian President Vladimir Putin as “the deal of the year,” the sale will reduce the Russian government’s stake in Rosneft to 50.1 percent.

The Russian budget has suffered heavily over the past two years due to low oil prices and Western sanctions imposed amid the crisis in Ukraine. Privatization has been an important topic of discussion as a way to reduce this budget deficit.

The privatization deal has been on Kremlin’s agenda since the beginning of 2016. However, doubts lingered over the realization of the sale because of financial sanctions imposed against the country.

The victory of Republican Donald Trump in the U.S. presidential elections appears as signal to Western companies that sanctions will now start to ease.

 

- OPEC and non-OPEC countries reach agreement

OPEC and non-OPEC countries reached an agreement on Saturday to cut their oil outputs.

Eleven non-OPEC countries, including Russia, have agreed to reduce their oil exports by 558,000 barrels per day.

The deal, which is a first since 2001, has been dubbed as “historic” by Khalid Al-Falih, the Saudi oil minister.

The move comes after over two years of low oil prices due to a supply glut in the market.

Among the non-Opec countries attending the meeting were Azerbaijan, Oman, Mexico, Malaysia, Sudan, South Sudan and Bahrain.

OPEC will also hold its next meeting on May 25, 2017 to monitor progress on the deal.

 

12 Dec,2016

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