* Rosneft seeks $42 billion of state aid citing sanctions
* Gazprom has first loss since 2008 due bad Ukraine debts
* Rosneft needs no money now, long-term plans at risk -
* Russian economy to struggle further under sanctions
(Adds deputy PM comment in para 5)
By Katya Golubkova and Dmitry Zhdannikov
MOSCOW, Aug 14 Russia's Rosneft, which
produces more oil than Iraq or Iran, is seeking a $42 billion
loan from a fund earmarked for Russian pensions to help it
weather Western sanctions imposed over Moscow's role in Ukraine.
Analysts expected the Russian government to turn down the
proposal by the world's largest listed oil producer, one fifth
owned by BP and run by a close ally of President Vladimir
Putin, unless political pressure is brought to bear.
It was one of the most stunning of several proposals for the
Russian state to help firms hit by U.S. and European sanctions
over Moscow's annexation of Crimea in March and role in
subsequent fighting in eastern Ukraine.
A government source said Rosneft had asked the National
Wealth Fund to buy 1.5 trillion roubles ($41.6 billion) of its
bonds to cover its net debt.
Deputy Prime Minister Arkady Dvorkovich told Russian news
agencies it would take the government two weeks to come up with
an answer. Rosneft declined to comment.
Most of the $86 billion fund, built up from oil revenues to
help finance a growing state pension deficit, has been invested
in infrastructure projects to try to boost the economic growth
that drove Putin's popularity during his first decade in power.
Brokerage Otkritie said the state had little room for
funding on such a scale. "Enthusiasm to support the country's
largest tax payer via a reversal of the cash flow will be
limited," it said in a note.
Russia relies on energy for half its budget revenues and
needs dozens of billions of dollars to sustain production from
new tight oil reserves and Arctic deposits to finance Putin's
soaring military and social costs.
Analysts said Rosneft's long term prospects had been hurt by
the sanctions but loans from China meant it was in reasonable
shape for now.
Russia, meanwhile, is on the brink of recession due to
plummeting investment and near record capital flight, with an
ageing population whose pensions are increasingly in
Rosneft head Igor Sechin, also targeted individually by U.S.
sanctions, said the company needed the money to help it cope
with a ban on U.S. credits and loans with a maturity longer than
90 days, which European banks and investors have joined.
In a further sign sanctions were taking their toll, gas
giant Gazprom, which supplies Europe with a third of
its gas needs, reported its first year-on-year loss since 2008,
even though it is not directly targeted by the U.S. or EU
Analysts said the gas pipeline monopoly, which has cut
supplies to Ukraine, could end up reducing supplies to Europe as
well due to growing international tension over pro-Russian
separatists fighting government forces in eastern Ukraine.
An anonymous official cited by Vedomosti called Sechin's
plan "horrible", and another government source told the paper
Prime Minister Dmitry Medvedev was unlikely to back it.
U.S. and European sanctions have drastically limited access
to Western banking money and modern oil technology while not
targeting current production.
Debt markets have been shut for all Russian companies from
July, regardless of whether they have been directly targeted,
but timid signs of a market reopening for Russian borrowers have
emerged over the past week.
Evraz has closed a $425 million syndicated loan with
European banks and LUKOIL got a $1.5 billion bridge
loan from U.S. banks.
While Western bankers can no longer fund Rosneft, many say
they are not yet worried about its financial situation.
The company needs to repay 440 billion roubles ($12 billion)
by year-end and another 626 billion roubles ($17 billion) next
year, according to its latest presentation. But it generates
enough cash to repay those debts.
"Rosneft has dozens of billions of dollars of credit lines
opened with China," one senior banker with a U.S. lender said.
However, longer-term prospects for the world's largest
holder of oil reserves among listed companies are less clear.
Last year, Sechin said Rosneft needs $0.5 trillion to
develop Russian Arctic fields. Analysts from Merrill Lynch said
the Arctic programme had long been seen as one of the bright
spots of Russia's future economic development.
"The sanctions on U.S. and EU offshore and tight oil
equipment might seem light at the first glance. They neither
affect current production nor did they halt near-term
exploration," analysts from Merrill Lynch said.
"The longer-term effect on the Russian economy can be far
larger from the lost multiplier effect of foregone
infrastructure investment," they said.
The bank said some $800 billion of direct investment and the
multiplier effect on the Russian economy from tapping huge
offshore and tight oil resources was now at risk.
FIRST LOSS SINCE 2008
Apart from Rosneft, sanctions have also been imposed on
empires of businessmen close to Putin such as Gennady Timchenko
or Arkady Rotenberg, as well as large state and private banks.
Gazprombank, VEB and Russian Agricultural bank have also
asked the state for help.
In June, Putin suggested a $50 billion recapitalisation of
Gazprom with the use of forex reserves, something the government
has not approved yet, another indication the funding request for
Rosneft may also not necessarily materialise.
Gazprom suspended deliveries to Ukraine in June over unpaid
bills and the market fears a repeat of the two supply crises of
the past decade when deliveries to the European Union via
Ukraine were also halted in the middle of winter.
On Wednesday, Gazprom reported its first quarterly loss
since the financial crisis of 2008 on the back of $5 billion of
overdue receivable, mainly from Ukraine.
"Gazprom's problems in Ukraine do not stop there," analysts
from state-controlled Sberbank CIB said in a note.
"Deliveries are halted for now and if no agreement is
reached before the start of the peak season, we see several
possible scenarios, ranging from the continuation of
non-deliveries to Ukraine... to Gazprom... shutting off gas
transit and sacrificing deliveries to Europe," they said.
(1 US dollar = 35.9380 Russian rouble)
(Reporting By Jason Bush and Katya Golubkova, editing by