Rosneft on the retreat in the Mediterranean

Western sanctions have upended one of Rosneft’s most promising ventures in Europe

Written by Joseph Murphy, commentary by Mauro Fiorucci

Russia ’s top oil producer, Rosneft, announced last week it would be offloading its remaining 12% stake in Italy’s Saras, the owner of the sixth biggest refinery in Europe. The rationale behind the move, according to Rosneft, was that Western sanctions had prevented it from pursuing its long-term plan to secure a controlling stake in the Italian firm. Critically, a majority share would have given Rosneft control over Saras’ crude purchases, thereby ensuring a larger market for its own supplies. The Russian company had also banked on taking part in joint trading operations with Saras that would have further expanded its foothold in the region. As such, Rosneft’s divestment marks its partial withdrawal from the Mediterranean oil market.

Sanctions

In a statement on January 18, Rosneft announced it had sold the share for 174.6 million euros (US$188 million) to institutional investors. Saras, founded in 1962 by Italy’s Moratti family, owns the 300,000 bpd Sarroch refinery on Sardinia along with storage facilities in Italy and Spain and a network of filling stations in the south of Spain. Rosneft agreed to a strategic pact with the Italian company in 2012 that called for the creation of a joint trading and refining venture. In April 2013, the state-owned firm bought a 13.7% stake in Saras for 178.5 million euros (US$191 million) and two months later snapped up a further 7.29% for 90 million euros (US$96.7 million). This plan to gradually expand ownership of Saras was upended abruptly in 2014, however, when Brussels and Washington imposed sanctions that effectively barred Rosneft from raising its stake any further. Notably, these restrictions also prevented the Russian supplier from purchasing the oil trading unit of US investment bank Morgan Stanley.

“At that time, Rosneft was trying to form a global oil trading business, and Saras could have played a role in that strategy in the Mediterranean,” Mauro Fiorucci, EMEA Transaction Services Leader at global energy consulting firm Opportune, told NewsBase…Click below to read the full article.

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