Kremlin to help Rosneft and banks hit by sanctions

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Kremlin to help Rosneft and banks hit by sanctions

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The Russian government has agreed to provide some state support for oil producer Rosneft to help it cope with the impact of Western sanctions.

But the Economy Ministry said it will be significantly less than Rosneft asked for – which was the equivalent of 31.5 billion euros.

Rosneft head Igor Sechin wanted cash from the National Wealth Fund to make up for what the economy ministry described as “a lack of financing from the global markets”.

The company had borrowed heavily to finance last year’s 42 billion euro acquisition of Anglo-Russian oil firm TNK-BP.

It needs to repay over nine billion euros by the end of this year and another 13 billion euros next year.

Analysts have been concerned about Rosneft’s ability to attract funds as costs of borrowing have risen for Russian companies after Moscow annexed the Crimean peninsula from Ukraine in March.

Two major state-controlled banks are also to get the equivalent of five billion euros in government aid because of sanctions.

VTB and Rosselkhozbank will receive the money in exchange for issuing new shares. They are Russia’s 2nd and 5th largest banks.