INTERVIEW-Russia's VTB head: Rosneft-Essar deal not subject to sanctions

GOA, India, Oct 15 (Reuters) - A deal in which a group led
by Russian oil major Rosneft will acquire India's
Essar Oil has been specially structured to avoid
falling foul of Western sanctions, Andrey Kostin, head of
Russian lender VTB, told Reuters on Saturday.
    India's debt-laden Essar Group confirmed on Saturday it had
agreed to sell a 98 percent interest in its Essar Oil unit to
the consortium led by Rosneft, giving the Russian energy giant a
gateway into the world's fastest-growing fuel market. VTB acted
as Essar's adviser on the deal. 
    Speaking to Reuters in an interview on the sidelines of
talks between Russian President Vladimir Putin and Indian Prime
Minister Narendra Modi, Kostin said the purchase would not
violate Western sanctions over Russia's role in the Ukraine
crisis because Rosneft will only acquire a 49 percent stake.
    "Rosneft will not get a controlling stake, partly because of
these reasons (sanctions)", he said.
    Rosneft's partners Trafigura and Russian fund United Capital
Partners (UCP) will acquire the remaining 49 percent. Rosneft
will pay around $3.5 billion for its stake, the same amount as
Trafigura and UCP.
    Kostin said neither Rosneft nor Trafigura had borrowed any
money to finance the purchase.
    "Trafigura and Rosneft are paying on their own, with no
funds lent from VTB", he said. "They (the buyers) will pay with
cash, it is a cash deal".
    In parallel with the deal, VTB has said it will lend Essar
around $3.9 billion for debt reconstruction. Kostin said UCP and
Rosneft could consider selling part of their stakes in the
    "I think UCP, which is a portfolio fund, will ... sell,
maybe to firms from this region, from Asia," he said.
"(Rosneft)may also sell, but it is likely to hold on. It sees an
opportunity to expand in the region."

 (Reporting by Denis Pinchuk; Editing by Jack Stubbs and Hugh