The world's largest-listed oil producer, Russia's Rosneft, has asked Moscow to help cover its enormous debt. It suggested tapping funds originally earmarked for Russian pensions.
Russia's Rosneft, the largest publicly traded oil company in the world, called Thursday for 1.5 trillion rubles (31 billion euros, $42 billion) in state aid to help it cope with Western sanctions.
The state-controlled oil giant reportedly suggested Moscow spend money from its National Wealth Fund, originally earmarked for Russian pensions, to buy Rosneft bonds, according to the Russian business daily Vedomosti.
Igor Sechin, Rosneft's chairman and a close ally of Russian President Vladimir Putin, presented government officials with a proposal that would help repay all of the company's net debt, which stands at exactly 1.5 trillion rubles, the newspaper said.
Russian government officials said they would need two weeks to respond to Rosneft's request. A ocmpany spokesperson said in an e-mail that Rosneft had "no comment for now."
Impact of Western sanctions
The plea for debt relief came in response to Western sanctions, as the company is scheduled to repay 440 billion rubles by the end of this year and another 626 billion rubles in 2015.
The United States has banned lenders from providing Rosneft any credit with a maturity longer than 90 days. European banks and investors have also followed suit.
Analysts said Rosneft's long-term prospects had been hurt by the sanctions, but noted that loans from China will keep the company in reasonable shape - at least for now.
The company produces more oil than Iraq or Iran and is partly owned by BP.
According to unnamed government sources who spoke to Vedomosti, Rosneft floated its proposal by Russian cabinet members as well as Prime Minister Dmitry Medvedev, who was unlikely to support it because the National Wealth Fund has insufficient reserves for a bailout.
Built up from oil revenues to help finance the state's growing pension deficit, the fund has invested as much as 3.1 trillion rubles in economic growth and infrastructure projects. That fact boosted Putin's popularity during his first decade in power.
In addition to Rosneft, sanctions-hit Russian banks, including Gazprombank, VEB and Russian Agricultural Bank, have also asked the government for help.
el/cjc (Reuters, AFP)