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Putin: Oil giant Rosneft may buy own shares to support budget

GOA, India (Reuters) - Russian President Vladimir Putin said on Sunday the nation’s top oil producer Rosneft could buy back its own shares slated for privatisation if enough buyers do not step up this year to purchase them.

The logo of Russia's Rosneft oil company is pictured at the central processing facility of the Rosneft-owned Priobskoye oil field outside the West Siberian city of Nefteyugansk, Russia, August 4, 2016. REUTERS/Sergei Karpukhin/Files

Moscow hopes to raise around 700 billion roubles ($11.25 billion) from the sale of a 19.5 percent stake in Rosneft to plug holes in the state budget hit by low world oil prices and Russia’s economic stagnation.

Putin said last week that Rosneft’s stake could be sold to private investors. He added on Sunday that the company could buy its shares from the government and resell them to private investors in future if demand proves weak now.

Speaking after a summit of the so-called BRICS states Brazil, Russia, India, China and South Africa in the Indian resort of Goa, he agreed with a reporter that such a buyback would fall short of a full privatisation.

“If it takes place, it will serve just as an interim step to make another one, towards its real privatisation, including by attracting strategic investors, possibly foreign ones, under state control,” he said.

If investors later bought the stake, this would be “a step towards real big privatisation of large-scale state property” in Russia. “We are not going to build state capitalism, we will follow the path of true privatisation,” Putin said.

“This year, this way or another, the budget should receive money, and I think this is a very cautious, if not a fine-tuned plan approved by the government.”

Last week the government completed the sale of a 50.08 percent stake in mid-sized oil producer Bashneft to Rosneft, raising 329.69 billion roubles for the budget.

Several Russian government officials, including Deputy Prime Minister Arkady Dvorkovich, had said earlier that they opposed plans by Rosneft Chief Executive Igor Sechin to expand further.

One state-controlled company buying another could hardly be called a proper privatisation, they said.

($1 = 62.2255 roubles)

Reporting by Denis Pinchuk, additional reporting by Katya Golubkova in Moscow; Writing by Olzhas Auyezov and Dmitry Solovyov; Editing by Tom Heneghan