Olga Yagova & Dmitry Zhdannikov

MOSCOW/LONDON – Glencore (OTC) has completed the sale of Russneft. This marks the end of two decades worth of investments that saw Glencore trade millions of barrels Russian oil while witnessing some of Russia’s most important corporate and political fights.

Glencore stated that the sale was years in the making, having been in progress since Glencore’s top management change in 2021. It will be completed in December 2021, and close within the first half 2022, subject to regulatory approvals.

This coincides with the most severe tensions between Moscow, the West and Moscow since the Cold War ended. Some Western companies seek to decrease their exposure to Russian assets.

Glencore didn’t give any reasons for its disposal, and it did not reveal the identity of the buyer nor the amount.

Russneft produces about 130,000 barrels a day. However, Russneft has had to face tough times ever since Mikhail Gutseriyev (its former owner) was sanctioned in 2013 by the European Union due to close connections with Belarussian President Alexander Lukashenko.

Russneft’s oil export sales were affected by sanctions, and Glencore was forced to stop buying the product for many months.

Glencore was a financial partner in Gutseriyev’s transformation of Russneft into an oil and gas company. It had funded the expansion of the business, which it then received oil export rights.

Glencore, which is one of the three largest global oil traders worldwide, was able to sell large quantities of Russian oil through this deal.

Glencore was a Russneft shareholder through decades of turmoil surrounding Russneft, with Gutseriyev losing control and fleeing to London in 2007. Glencore returned home to be a loyal Kremlin Partner again.

Russneft has billions in debt to Russian banks. Gutseriyev also had bankruptcies at several other financial institutions.

A source close to the Russian oil market stated that Glencore has chosen the right moment for Russneft because oil prices are high, but the asset was very risky.

Glencore is less exposed to Russia as its new Chief Executive Gary Nagle (and Alex Sanna), are restructuring the company following decades of Ivan Glasenberg’s leadership and Alex Beard’s close ties with Moscow.

Glencore’s 5-year supply agreement with Russia’s largest oil company Rosneft ended last year. However, the Swiss firm continues to load Russian fuel as the winner in Rosneft’s regular crude- and products tenders.