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Rosneft Becomes Strategic 22.05.2007 The St. Petersburg Times - MOSCOW — Russia's inclusion of Rosneft in its list of strategic companies will protect the state-controlled oil firm from bankruptcy and keep the state’s share at no less than 75 percent, analysts said Friday. The government said Thursday that it had added Rosneft, the country's biggest oil company, to its list of strategic companies that are protected because they provide research or resources crucial to national defense. “Strategic status offers special conditions for bankruptcy, and makes the liquidation process more difficult," said Caius Rapanu at UralSib. "Furthermore, under this status, the Russian government's 75 percent stake in Rosneft may not be reduced until Rosneft is included in a privatization plan.” Including Rosneft in the strategic list could lead to a re-rating of its debt, said Steven Dashevsky at Aton brokerage. Rosneft had debt of $13.8 billion at the end of 2006 and earlier this year it arranged an additional $22 billion credit to finance its purchase of assets from the bankrupt oil firm Yukos. “Investors may find comfort in the state’s enhanced support of the company’s debt obligations, expressed through special bankruptcy procedures and perceived potential link between the country’s and the company’s credit ratings,” he said.

18 May 2007 - Upstream OnLine - Russia's inclusion of Rosneft in its list of strategic companies will protect the state-controlled oil producer from bankruptcy and keep the state's share of the company at no less than 75%. Late last night Russia's government said it had added state-controlled Rosneft to its list of strategic companies that are protected because they provide research or resources crucial to national defence. "Strategic status offers special conditions for bankruptcy, and makes the liquidation process more difficult," Caius Rapanu at UralSib bank told Reuters. "Furthermore, under this status, the Russian government's 75% stake in Rosneft may not be reduced until Rosneft is included in a privatisation plan." Including Rosneft in the strategic list could lead to a re-rating of its debt, said Steven Dashevsky at Aton brokerage. Rosneft had debt of $13.8 billion at the end of 2006 and earlier this year it arranged an extra $22 billion credit to finance its purchase of assets from the bankrupt player Yukos. "Investors may find comfort in the state's enhanced support of the company's debt obligations, expressed through special bankruptcy procedures and perceived potential link between the country's and the company's credit ratings," he told Reuters. Rosneft has bought the bulk of Yukos' assets in a series of auctions held by the state to recover the bankrupt company's debt of over $26 billion. Earlier this week, Rosneft published weak 2006 financial results despite rising oil prices. Analysts said the results were affected by rising interest on the firm's outstanding debt. The government sold around 15% of Rosneft's shares during an initial public offering last year. The sale raised $10.6 billion. The government has said it might sell more Rosneft shares but that will be harder to achieve now it is a "strategic" company. "In our view, the government's decision eliminates the risk of a stock overhang," Pavel Kushnir from Deutsche UFG said. The addition of Rosneft to the list reflects the Kremlin's strategy of strengthening the state's position in the strategic sectors, including energy, analysts told Reuters. "We believe this to be a logical development given the Russian state's current policies and Rosneft's informal status as the national oil champion," Kushnir said.