Unveiling the deal at a televised meeting with Rosneft’s boss Igor Sechin on Dec. 7, President Vladimir Putin called it a sign of international faith in Russia, despite U.S. and EU financial sanctions on Russian firms including Rosneft.



That piece of raw intelligence was presented on October 18th, and the actual privatization of 19.5% of Rosneft actually took place on December 10th.

The deal, if not its details, was in the works for quite some time and possibly public enough for a very well informed and clever intelligence officer to “fit the facts” to make it look retroactively damaging. The actual deal is extraordinarily convoluted and has caused head scratching in Russia.

It involves ostensible investment by Swiss giant Glencore and something called the Qatar QIA fund, with financing by Russian banks and an Italian bank. There was a bond sale of Rosneft to raise money which was then reinvested as loans issued by Russian banks to the foreign investors. A series of shell companies were created and somehow the actual ownership seems to have shifted to a company in Singapore (use Google Translate).

Running down what actually happened here is a job for investigators at the Treasury Department or perhaps the Central Intelligence Agency, but it was done at least in part to raise funds that could be transferred into the Russian treasury to cover operating expenses, as Putin explained in his annual year-end press conference:

The ink’s still drying on the $11 billion sale of 19.5 percent of state-controlled Rosneft PJSC to Glencore Plc and Qatar’s sovereign wealth fund…


But important facts about the deal either have not been disclosed, cannot be determined solely from public records, or appear to contradict the straightforward official account of the stake being split 50/50 by Glencore and the Qataris.

For one: Glencore contributed only 300 million euros of equity to the deal, less than 3 percent of the purchase price, which it said in a statement on Dec. 10 had bought it an “indirect equity interest” limited to just 0.54 percent of Rosneft.





…The first such agreement in 15 years will bring at least 1 trillion rubles ($16 billion) to Russia’s treasury, according to VTB Capital and Morgan Stanley estimates. Putin played a key role in the process, talking to global leaders and Russia’s oil executives, according to Energy Minister Alexander Novak and the Kremlin.

At a minimum, the deal concerned the U.S. because it appeared to violate the sanctions imposed on Russia. Immediately after the deal was announced, White House spokesman Josh Earnest said:

“The thing I can confirm for you is that the experts at the Treasury that are responsible for constructing and enforcing the sanctions regime will carefully look at a transaction like this,” Earnest told reporters. “They’ll look at the terms of the deal and evaluate what impact sanctions would have on it.”