Rosneft kicks off Russian oil's London charm offensive

LONDON/MOSCOW Fri Oct 5, 2012 2:11pm EDT

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LONDON/MOSCOW Oct 5 (Reuters) - Rosneft Chief Executive Igor Sechin met investors in London on Friday, launching a charm offensive by Russia's oil industry which is trying to court foreign capital after a decade in which it became almost synonymous with resource nationalism.

An end to rapid gains in oil prices and domestic crude oil output over the past three years has pushed Russia's energy companies into the arms of foreign investors, to meet their growing needs for capital and technology to revive output growth.

Sechin's meetings with London fund managers preceded a similar meeting by oil minister Alexander Novak, scheduled for Tuesday, and investor meetings by LUKOIL, Russia's No. 2 oil producer, later in October.

A source familiar with Sechin's remarks said the Rosneft CEO, an ally of President Vladimir Putin of more than 20 years, declined to answer questions about Rosneft's interest in BP's 50 percent stake in a Russian rival, TNK-BP.

Rosneft has said it wants to buy BP out of TNK-BP and is seeking as much as $15 billion in debt funding, bankers have said.

BP could then reinvest part of the proceeds in a sizeable equity stake in Rosneft itself, both companies have said.

But BP is obliged to negotiate in good faith until mid-October with its partners, a quartet of Soviet-born billionaires who have also expressed interest in buying out BP, leaving talks on any strategic deal effectively on hold for now.

RISING DEMAND

Instead, the source said, the discussion focused on the cost of plans to upgrade Rosneft's refineries, which risk falling short of rising Russian demand for gasoline and currently produce fuel which lags European emissions standards.

Spending needs for a Venezuelan crude venture, Carabobo 2, were also discussed, the source said.

In tow was an executive from the Moscow office of ExxonMobil , which sealed a landmark Arctic drilling and shale exploration venture with the Russian state company last year.

Exxon CEO Rex Tillerson, who has accompanied Sechin personally when the Rosneft CEO has made strategy presentations to the Kremlin in recent months, has praised "political leadership (and) policy partnerships" with Russia as a model for the rest of the world.

The Exxon deal and subsequent deals with Eni and Statoil, sealed when Putin was serving as prime minister and Sechin was his deputy, were aimed in part at securing Sechin's role as the industry's top dealmaker.

Russia's energy minister, Alexander Novak, told the Financial Times that licenses to drill in Russia's Arctic waters, currently the exclusive preserve of state oil companies, could eventually be co-owned by foreigners.

A source close to Rosneft said Sechin was aiming to showcase the work of a presidential commission on energy chaired by President Vladimir Putin. Sechin is secretary of the commission, his only formal policy role since leaving the government.

He has clashed openly with Arkady Dvorkovich, his successor in the government of Prime Minister Dmitry Medvedev, in particular over plans to privatise Rosneft and other key energy companies.

Both men say, however, that they are reluctant to see Russian energy companies privatised at low valuations.

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