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Rosneft Slumps to October Low on 19% Stake Sale: Moscow Mover

OAO Rosneft tumbled to the lowest level in five months as Russia weighs the sale this year of 19 percent in the country’s biggest oil producer.

Rosneft fell 1.9 percent to 221.66 rubles by the close in Moscow, the lowest level since Oct. 22. The amount of shares traded was 6.3 million, equivalent to about 1.1 times the three-month average. The stock dropped 1.7 percent to $7.13 in London. The amount of shares traded was 9.2 million.

The Rosneft stake offered would be on top of stock that BP Plc bought last month, Economy Minister Andrei Belousov told reporters today in Moscow. Russia plans to raise 427 billion rubles ($14 billion) this year in asset sales to help balance the budget, Finance Minister Anton Siluanov said in March. A 19 percent stake would equal about $14.4 billion based on today’s market price.

“It wasn’t expected that the government would want to sell such a big stake,” Mikhail Loshinin, an analyst at Rye, Man & Gor Securities, said by phone from Moscow. “Foreigners don’t believe in the Russian market, it’s unclear how they’re going to find demand for such a large amount of shares.”

Prime Minister Dmitry Medvedev’s government is seeking to cut the state’s stake in Rosneft and reduce its weight in the economy. Rosneft Chief Executive Officer Igor Sechin, who oversaw the company’s $55 billion takeover of TNK-BP this year and the acquisition of oil assets from Yukos previously, has opposed a sale for the sake of reducing state ownership and called for a decision to be based on price.

Rosneftegaz, the state holding company where Sechin is chairman, still has the $4.87 billion it received for selling 5.66 percent of Rosneft to BP Plc as part of the TNK-BP deal, Belousov said.

By law, a controlling 50 percent plus one share in Rosneft must remain in state hands, Belousov said.

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