The Daily Update - Russia Saudi

In an attempt to avoid once again discussing the UK/EU vote on Thursday, although it is hard not to mention the pound’s biggest jump in 8 years against the US dollar, as the polls moved in favour of “remain" yesterday; some interesting news from Russia. (Couldn’t find much of interest in Australia which is even further away from Brexit!!!)

It was announced yesterday that Mr Putin, is looking to sell off part of Rosneft OJSC; regarded as part of Russia’s corporate crown jewels, with China and India likely targets for the sale. It appears as though Russia is trying to follow the lead from Saudi Arabia with their corporate actions in their giant Saudi Aramco where they intend to offer a share in Aramco, which is expected to be the world’s largest IPO, in order to help part finance a new sovereign wealth fund to steer Saudi away from reliance on carbon fuels and diversify their economy over the coming years.

We think Mr Putin has other ideas and will utilise the sale to the two countries among the highest in global energy demand to help balance his balance sheet but more importantly to bolster sales as he tries to battle with OPEC over market share. By bringing two of Asia’s largest economies into Rosneft it strengthens Mr Putin’s geopolitical hand in the region and virtually guarantees a boosting of oil and gas supplies to the region. Rosneft has a market capitalisation of $55.4bn with shares of around $11bn thought to be under discussion with companies such as India Oil & Natural Gas Corp and China National Petroleum Corp.

The International Energy Agency estimates India will consume around 4.2bn barrels a day (bpd) this year, more than Japan at 4.1m but less than China at 4.8m, but by 2040 will need an additional 6m bpd; surpassing all other countries in the region.

Whether you like him or not, Mr Putin remains a politician not to be underestimated and remains high in the ratings at home; meanwhile back at Brexit…..