Rosneft Raises $1.5 Billion Through Selling BP Fuel in Advance

OAO Rosneft (ROSN), Russia’s largest oil producer, raised at least $1.5 billion through a five-year deal to supply crude oil and fuel to BP.

BP will pay in advance for as much as 12 million tons of oil products and crude to be supplied during the next five years, starting in July, Rosneft said in a statement today.

State-run Rosneft is increasingly using more pre-payment deals to raise funds, a trend that may accelerate as deteriorating relations between Russia, the U.S. and Europe make it more expensive to borrow in mainstream debt markets. The company’s CEO, Igor Sechin, said in February that pre-payments could total more than $100 billion by 2017.

The Moscow-based company already has agreements with oil traders Glencore Plc (GLEN) and Vitol Group as well as Chinese customers including China National Petroleum Corp.

A number of the world’s leading financial institutions participated in today’s deal with BP, Rosneft said without naming the banks.

U.K. banks HSBC Holdings Plc (HSBA) and Lloyds Bank Plc (LLOY) withdrew from the group arranging the finance on concern that lending to Russian companies was too risky after the imposition of U.S. and European Union sanctions, people familiar with the matter said earlier this month.

BP became Rosneft’s largest shareholder after the Russian state last year when it acquired a 19.8 percent stake as part of deal to sell its shares in oil explorer TNK-BP.

The deal “allows Rosneft to support high profitability of its sales activities and acquire additional financial resources,” Sechin said in today’s statement. “Rosneft extends and strengthens its mutually beneficial cooperation with BP.”

To contact the reporter on this story: Will Kennedy in London at wkennedy3@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Torrey Clark, Alex Devine

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