You're reading: Deputy PM: Russian govt still planning to privatize Rosneft by 2018

MOSCOW - The Russian government still has plans to reduce the state's stake in oil major Rosneft to less than 50% by 2018, Deputy Prime Minister Arkady Dvorkovich said in an interview with Kommersant published on Thursday.

“We fully confirm the privatization plans, including Rosneft: the reduction of the state’s stake to less than controlling or the complete sale of the state stake should take place by 2018,” Dvorkovich said.

He said the deal to sell 5.66% of Rosneft shares held by state holding company Rosneftegaz to BP is part of this process. “And the current deal is a step forward in the privatization program because 5.66% of Rosneft shares will be sold directly by Rosneftegaz to BP, and BP will get another 13% of shares that are held within the Rosneft group as payment. Therefore, the share of private shareholders in Rosneft will increase. And in this sense the deal is far more balanced than may have appeared initially,” Dvorkovich said.

He said that the deal in which Rosneft will acquire oil company TNK-BP from BP and the AAR consortium will benefit the government.

“We looked at all the financial indicators on the deal and from the formal point of view it benefits the state. Rosneft’s flow of dividends will not decrease, even taking into account annual payments on the debts that will arise. On the contrary, we expect an increase in budget revenues in subsequent years. We also expect that the presence of two BP representatives on Rosneft’s board of directors will make it possible to improve the company’s corporate governance and increase its efficiency in general,” Dvorkovich said.

“We expect that, in violating the principle of not expanding state involvement in the economy, we will get other pluses from this deal. Its approval has already essentially been completed,” Dvorkovich said.

He also said that Rosneft and the Natural Resources Ministry might soon agree on work on another one of the 14 license areas on the continental shelf that the company is seeking. Decisions to issue another two licenses to Rosneft have already been made, he recalled.

“Questions remain on the remaining 11 areas. If these 14 licenses, for example, had already been issued, then there simply wouldn’t be any point in talking about expanding the makeup of entities on the shelf. Because these licenses account for more than 70% of the shelf, the rest is already not that essential,” Dvorkovich said.

He said the government is still considering whether it would be wise to liberalize access to the shelf. He recalled that Lukoil has submitted its proposals to the government concerning the development of a number of blocks on the Arctic shelf that “according to the numbers are consistent with the government’s vision.” But no final decisions have been made on this issue.

“There will be a meeting with the prime minister on the program for the development of the shelf. This topic will be considered at it, including in regard to Lukoil,” Dvorkovich said.