Rosneft flotation 'fully subscribed', claim advisers

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The Independent Online

A spokesman said that the book was now "slightly more than fully covered" but declined to say at what price. Rosneft, which is planning to float between 13 and 19 per cent of its shares, will fix the price next Thursday. Dealings are due to commence on 19 July.

Three big strategic investors are said to have put in firm orders for about $5bn worth of stock. The next biggest block of orders comes from Russian retail investors and an assortment of oligarchs with a group of international institutional investors making up the third tranche.

Sources involved in the offer, which is expected to value Rosneft at between $60bn and $80bn, indicated that the three strategic investors were BP, the state-owned Malaysian oil company Petronas and China National Petroleum Corp.

However, BP maintained that it had not made any commitment and was still weighing whether to take a stake in Rosneft. Getting BP on board as an investor would be a huge coup for Rosneft because of the campaign to stop the flotation on the grounds that the company's main asset was stolen by the Kremlin from another oil company Yukos.

The former chief executive of Yukos, Mikhail Khodorkovsky, is serving time in a Siberian concentration camp after being found guilty of tax fraud. The case was widely seen outside Russia as a show trial, and Rosneft is now facing lawsuits demanding a total of $48bn in compensation.

Persuading a leading Western oil major to back Rosneft is therefore critical to the Kremlin's desire to give respectability to the offer. BP has a joint venture in Russia, TNK-BP, and is also involved in the giant Sakhalin project in eastern Siberia. Taking a strategic investment in Rosneft could help in its future dealings with the Kremlin.

BP, in common with a number of other potential strategic investors, is playing a waiting game - watching to see who else will back the float before making its own decision. It is also waiting to see if the price will come down, believing the $5.85 to $7.85 range to be too high. Russia's economy minister, German Gref, whose deputy sits on the Rosneft board, ruled out a price reduction, however, saying there was no need to change the range.

Mr Khodorkovsky's lawyer, Robert Amsterdam, has campaigned tirelessly to get the float halted on the grounds that the four investment banks handling it and the investors who buy into it will have "blood on their hands". The Financial Services Authority, the listing authority for London, has refused to intervene.