Download Sanctions & Financing: Rosneft’s Global Expansion

Executive Summary

This report examines Rosneft’s international operations and its source of financing while under Western sanctions. Intended to disincentivize malign activity, Rosneft, a Russia state-owned oil company led by Vladimir Putin ally Igor Sechin, has responded to sanctions by spearheading efforts to support the Nicolás Maduro regime in the Bolivarian Republic of Venezuela, acquiring a dominant position in the Kurdistani oil sector, and opening projects in Arab Republic of Egypt and Republic of India, among other countries. These actions have been achieved despite Rosneft’s being locked out of Western financial markets, a drop in global oil prices, and a stagnating Russian economy. Rosneft has financed its global expansion by relying on its close relationship with the Kremlin to secure credit from state banks and the domestic capital market. In the process, Rosneft has amassed debt ratios and costs of financing far above competitors. However, as long as the Kremlin is willing and capable of prioritizing Rosneft for political purposes, Rosneft’s financial health is not in jeopardy. Instead, the costs of the strategy are manifested through distortions in the Russian financial sector, reduced competitiveness in the energy sector, and elite competition in the public sphere.

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