Russian media reports deal for the sale of a stake in a sanctioned oil company can go forward with few legal problems. Photo courtesy Russian oil company Rosneft
MOSCOW, Dec. 12 (UPI) -- Russian media sources said last week's deal for the acquisition of shares of oil company Rosneft is outside the reach of Western-backed economic sanctions.
Anglo-Swiss trader and mining company Glencore said during the weekend it closed on a deal alongside the Qatar Investment Authority to spend $11 billion for a 19.5 percent stake in Russian oil producer Rosneft, a target of U.S. sanctions imposed after Moscow annexed the Crimean Peninsula in Ukraine following upheaval in the former Soviet republic in 2014.
A source familiar with the transaction was quoted by Russian news agency Tass as saying investors did due diligence on the deal before moving forward.
"This deal is outside the sanctions," the source was quoted as saying. "For all regulating bodies this is a maximum comfortable deal."
Moscow has been reviewing privatization options as the Russian economy risks lingering in recession because of the strains brought on by Western sanctions and low crude oil prices. Finance officials in the Kremlin said in early 2016 that privatizing state oil companies could bring in billions of dollars to the federal budget.
Rosneft is Russia's largest oil producer. The company reported its third quarter profit of around $400 million was off 77 percent from the previous year. CEO Igor Sechin blamed the sustained low price for oil for the poor performance.
White House spokesman Josh Earnest told reporters last week the Rosneft deal may be under review from authorities at the U.S. Department of Treasury.
"They'll look at the terms of the deal and evaluate what impact sanctions would have on it," he said.
Glencore made no reference to sanctions in a weekend statement announcing the close of the deal. CEO Ivan Glasenberg said the arrangement gives his company access to the Russian and global oil market, which is recovering in the wake of a production deal between members of the Organization of Petroleum Exporting Countries and fellow producers like Russia.