UPDATE 1-Kremlin aide says state-held Rosneft stake can't be sold on open market - agency

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MOSCOW, May 26 (Reuters) - Russia should not sell a planned 19.5 percent stake in top national oil producer Rosneft on the open market, but should rather look to attract two strategic investors, TASS news agency quoted a Kremlin adviser as saying on Thursday.

Moscow included a planned reduction in its stake in Rosneft, the world’s top listed oil producer by volume, to 50 percent from 69.5 percent, in its privatisation plan for 2016. The sale is expected to bring around 650 billion roubles ($10 billion) to the budget.

“We clearly understand that it should not be via the market as the market cannot digest such a volume. An active search for a strategic investor is now under way,” Andrei Belousov, who is also Rosneft chairman, told TASS.

He added that, ideally, the 19.5 percent stake should be split between two investors. Belousov did not name them.

Last month, a senior official with China National Petroleum Corp, one of the largest buyers of Rosneft oil, said that the company was interested in Rosneft’s privatisation.

A Kuwaiti official was quoted by TASS in April as not ruling out a possibility of taking part in the Rosneft’s stake sale.

BP owns a 19.75 percent stake.

Italian bank Intesa Sanpaolo was chosen as an investment consultant for Rosneft’s privatisation, with White&Chase selected as legal advisers, Russian Economy Minister Alexei Ulyukayev said earlier.

Russian Finance Minister Anton Siluanov told reporters separately on Thursday that the ministry expected to conduct the sale in the second half of this year.

Apart from Rosneft, the state plans to reduce its holdings in oil firm Bashneft, state bank VTB, diamond miner Alrosa and some other assets this year. ($1 = 65.3405 roubles) (Reporting by Alexander Winning and Darya Korsunskaya; writing by Katya Golubkova; Editing by Lidia Kelly and Alexandra Hudson)