Posted June 29, 2014 3:27 pm by Comments

Rosneft Oil Company OJSC (OTCMKTS: RNFTF) signed its second major agreement with BP plc (NYSE: BP) on Friday since sanctions were imposed on the Russian oil company’s chief executive Igor Sechin – a close ally of President Vladimir Putin who has had a visa ban and asset freeze slapped on him by the United States. The five-year agreement will supply BP with up to 12 million tons of refined oil products and involves a pre-payment of at least $1.5 billion arranged by leading global financial institutions albeit the Moscow Times has also reported that Lloyds Banking Group PLC (NYSE: LYG), part-owned by the British government, has withdrawn from a the trade finance deal.

Bob Dudley, BP plc’s chief executive, has told reporters:

“I am working here with Rosneft. It’s a business between the companies. I don’t comment on personal sanctions.”

The Financial Times quotes Sechin as saying:

“This transaction opens up new opportunities for both companies: it provides BP with stable supply chain and guaranteed quality of oil products and allows Rosneft to support high profitability of its sales activities and acquire additional financial resources in accordance with the referential nature of such deals.”

The Moscow times has noted that since the “sanctions” were imposed, executives from Total, BP, Statoil and ExxonMobil have visited Russia while Sberbank Rossii OAO (OTCMKTS: SBRCY) and Gazprombank, two of the country’s top lenders, this week raised €1bn each in the first major bond deals since the annexation of Crimea. Moreover, some Russian energy companies have recently been talking to their customers about a possible switch to using currencies other than the US dollar in transactions to minimize sanction-related risks.

To read the whole articles, Russia’s Rosneft and BP Sign Long-Term Oil Deal and BP and Rosneft sign $1.5bn oil deal, go to the website of the Moscow Times and the Financial Times, respectively.

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