UPDATE 1-Rosneft targets oil trading big league with Morgan Stanley deal

Mon Dec 23, 2013 9:34am EST

* Morgan Stanley sold most of oil trading to Rosneft

* Rosneft is the world's top listed oil company by output

* Deal boosts Rosneft in global oil markets -CEO Sechin

MOSCOW, Dec 23 (Reuters) - Russia's Rosneft will be trading oil from offices in London, New York and Singapore following its purchase of Morgan Stanley's business, in a challenge to established players such as BP.

Rosneft jumped to the top of the global production league this year with a $55 billion acquisition of rival TNK-BP. This made the company the world's largest listed oil producer with refining assets across Russia and the European Union. But the state-controlled group lacked a large trading division, which international oil companies such as BP and Royal Dutch Shell have.

The Morgan Stanley deal, agreed last week, represents a "breakthrough in strengthening Rosneft's commerce and logistics unit, which will spearhead the company's growth in the international oil and products markets," Chief Executive Igor Sechin said on Monday.

Morgan Stanley has sold the majority of its global physical oil trading operations to Rosneft, becoming the latest Wall Street firm to dispose of a major part of its commodity business. The parties did not disclose the price.

The deal sends a clear signal Rosneft is keen to regain as much added value as possible from trading after selling oil for years via international energy companies such as BP or trading houses such as Vitol and Gunvor.

Sechin, a close ally of President Vladimir Putin, said the transaction would boost the company's presence on the global oil markets and help to increase the value of Rosneft's own oil output as well as open up new revenue streams by providing access to third-party crude oil and products.

The deal is the latest push by Rosneft into North America and follows an agreement with ExxonMobil in 2011 which gave the state-run company access to some projects, such as the Cardium tight oil project in Canada, West Texas unconventional exploration and deepwater exploration in Gulf of Mexico in the United States.

Some 100 traders and 180 back-office personnel will be joining Rosneft, from Morgan Stanley under the deal. But Rosneft's trading desks will still be dwarfed by BP's trading operation of over 3,000 people.

The purchase will not include Morgan Stanley's oil storage, pipeline and terminals firm, TransMontaigne Inc., which may help avoid significant scrutiny of the deal in Washington.

Rosneft is currently pumping around 40 percent of Russia's total crude production of 10.6 million barrels per day.

Rosneft has an oil trading division in Geneva, which helps supply its refining assets in Europe.

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