Money more than morals

1 May 2006

It isn t just unease about Russian corporate governance that has pushed Rosneft to halve to about $10bn its planned stock market listing. Rosneft no longer needs to raise so much cash, thanks to high oil prices. That s just as well as investors will demand a big discount.

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Moscow may halve Rosneft's controversial public offering from the $20bn it had indicated it wanted to raise from the oil firm's IPO, which was to have been the world's biggest.

But sources close to the company said that any reduction would be due to Rosneft's lower financing needs, thanks to high oil prices. The London listing may take place as soon as July.

F&C Asset Management last week threatened to boycott the IPO unless it was satisfied that the company had made adequate provision for liabilities linked to its questionable acquisition of Yukos' biggest asset, Yuganskneftegaz.

Peter O'Brien, a former banker at Morgan Stanley who joined Rosneft recently as its chief financial officer, said the final decision on the IPO would be taken by the Russian government. He told the Financial Times that continued high oil prices had altered the company's financing requirements.

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