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US sanctions can affect Rosneft privatisation plans

Minister of Economic Development Alexei Ulyukayev said in June that Rosneft could be privatised in 2014

SYDNEY, July 19 /ITAR-TASS/. The U.S. sanctions against Russia’s the state-owned oil company Rosneft can affect its privatisation plans, Minister of Economic Development Alexei Ulyukayev said on Saturday, July 19.

He attended a meeting of the G20 trade ministers in Australia.

Ulyukayev said in June that Rosneft could be privatised in 2014. “I think there is such a possibility,” he said.

The value of Rosneft shares is quite high now. “This is a public company that is clear to investors,” the minister added.

Speaking about privatisation in general, Ulyukayev said, “There is a chance [to privatise some companies in 2014]. I think markets are improving and we are making preparations.”

Rosneft is the leader of Russia’s petroleum industry and the world’s largest publicly traded petroleum company. Rosneft activities include hydrocarbon exploration and production, upstream offshore projects, hydrocarbon refining, and crude oil, gas and product marketing in Russia and abroad.

The company is included in the list of strategic companies and organisations of Russia. The main company shareholder (69.50%) is OJSC ROSNEFTEGAZ, a 100% state-owned company. BP owns another 19.75%, and the remaining 10.75% of shares are publicly traded.

The Russian government plans to receive 3,000 billion roubles from the privatisation of state-owned property in 2012-2016. This exceeds privatisation revenues over the past 18 years.

In 2012, 202 billion roubles worth of state property were sold, 1.6 times more than in 2011; privatisation revenues in 2013 amounted to 6.261 billion roubles.

By 2018, the number of joint stock companies in federal ownership will decrease 10 times, and the share of civil servants in such companies' governing bodies will be reduced to 30% during the same period of time.

There are 2,325 joint stock companies in the federal register of federal property. The combined value of all federal property is 12,000 billion roubles.

Prime Minister Dmitry Medvedev said only those assets would remain in federal ownership that secure strategic interests of the State.

He stressed that the policy of reducing the public sector had been pursued consistently for several years and it “is decreasing all the same” no matter what some say.

“Privatisation priorities mean not only a way to augment the state budget. They also mean the appearance of long-term investors and effective owners, those who have sufficient capabilities,” the prime minister said.

The sale of state-owned property should take into account demand among investors, Medvedev said. But this does not mean that “we should sit around and wait for a better situation some 150 years from now. We won't sell anything if we do this,” he said.

He noted that assets that were prepared as a whole rather than as a set of separate components sell the best.

The Russian government said earlier its privatisation plan included more than 850 organisations, such as VTB bank, Sovcomflot, the United Grain Company, RusHydro, Sberbank, Rosneft, Rosagrolizing, Rosselkhozbank, Russian Railways Company, and others.

Russia will also continue to privatise state-owned banks after 2015.

According to the privatisation plans, the government intends to reduce its share in Sberbank, VTB and Rosselkhozbank to 50% plus one share.

Subject to privatisation will be large enterprises in the oil and oil transportation sector, air transportation, financial sector, machine-building, and defence industry.

There are 2,500 more enterprises across Russia that can be of interest to investors. These companies are engaged in wood processing, agriculture and other industries.