Russian oil giant seeks funds earmarked for pensions
MOSCOW (Reuters) - Russia's Rosneft , which produces more oil than Iraq or Iran, is seeking a $42 billion loan from a fund earmarked for Russian pensions to help it weather Western sanctions imposed over Moscow's role in Ukraine.
Analysts expected the Russian government to turn down the proposal by the world's largest listed oil producer, one fifth owned by BP and run by a close ally of President Vladimir Putin, unless political pressure is brought to bear.
annexation of Crimea in March and role in subsequent fighting in eastern Ukraine.
A government source said Rosneft had asked the National Wealth Fund to buy 1.5 trillion roubles ($41.6 billion) of its bonds to cover its net debt.
Deputy Prime Minister Arkady Dvorkovich told Russian news agencies it would take the government two weeks to come up with an answer. Rosneft declined to comment.
Most of the $86 billion fund, built up from oil revenues to help finance a growing state pension deficit, has been invested in infrastructure projects to try to boost the economic growth that drove Putin's popularity during his first decade in power.
Brokerage Otkritie said the state had little room for funding on such a scale. "Enthusiasm to support the country's largest tax payer via a reversal of the cash flow will be limited," it said in a note.
Russia relies on energy for half its budget revenues and needs dozens of billions of dollars to sustain production from new tight oil reserves and Arctic deposits to finance Putin's soaring military and social costs.
Analysts said Rosneft's long term prospects had been hurt by the sanctions but loans from China meant it was in reasonable shape for now.
Russia, meanwhile, is on the brink of recession due to plummeting investment and near record capital flight, with an ageing population whose pensions are increasingly in doubt.
Rosneft head Igor Sechin, also targeted individually by U.S. sanctions, said the company needed the money to help it cope with a ban on U.S. credits and loans with a maturity longer than 90 days, which European banks and investors have joined.
In a further sign sanctions were taking their toll, gas giant Gazprom , which supplies Europe with a third of its gas needs, reported its first year-on-year loss since 2008, even though it is not directly targeted by the U.S. or EU restrictions.
Analysts said the gas pipeline monopoly, which has cut supplies to Ukraine, could end up reducing supplies to Europe as well due to growing international tension over pro-Russian separatists fighting government forces in eastern Ukraine.
An anonymous official cited by Vedomosti called Sechin's plan "horrible", and another government source told the paper Prime Minister Dmitry Medvedev was unlikely to back it.
U.S. and European sanctions have drastically limited access to Western banking money and modern oil technology while not targeting current production.
Debt markets have been shut for all Russian companies from July, regardless of whether they have been directly targeted, but timid signs of a market reopening for Russian borrowers have emerged over the past week.
Evraz has closed a $425 million syndicated loan with European banks and LUKOIL got a $1.5 billion bridge loan from U.S. banks.
While Western bankers can no longer fund Rosneft, many say they are not yet worried about its financial situation.