Qatar’s investment in Russia – Deal to boost Kremlin economy

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Last week, Qatar purchased 19.5 percent shares of Roseneft at a price of 10.5 billion euros, but it is only going to pay 300,000 million euros for its part, and will receive over 220,000 barrels of oil supply per day.

The deal of such magnitude will certainly boost the Russian economy, which was in need for such foreign investments. The latest one is the biggest foreign investment in Russia since 2014 following the American and European sanctions. It is quite an eye-opening deal that raises some questions, especially since it happened immediately after the successful meeting of OPEC last Wednesday.

Russia’s support and the role it played in OPEC’s conclusion could be the main factors behind such an oil deal for Roseneft such that Qatar will be the third largest owner along with BP with 19.7 percent and the remaining shared by the Russian government and other shareholders.

The deal has come at a time when the Russian economy was desperate and in need of such huge boost of 10.5 million euros, thereby seeking other foreign investors to feel safe and overcome the sanctions imposed on it in 2014 after the Ukraine crisis.

This deal will help the oil prices and will perhaps represent a positive step for the Russian oil companies to be part of OPEC or at least support it if not be a part of it. Reducing or freezing production is perhaps a new move for Russia but it will preserve strong oil prices and help its own economy. This is just a new era with wider cooperation and understanding.

Are we going to witness new cooperation, more investments and involvement of Gulf States in the Russian economy? Will there be more acquisitions? — These questions will be answered in the coming months.

We know Qatar is not an oil country. Its economy is dependant more on gas than oil. However, its acquisition of Roseneft could be based on its energy policy for investing in oil. In this regard, Russia seems to be a good place to start in consideration of its huge oil and gas reserves, while Roseneft is in need of a strong harmless partner with huge cash reserves.

Therefore, there are definitely mutual benefits for both parties with its long term strategy. More questions in this regard will be answered in the years to come.

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By Kamel Al-Harami

Independent Oil Analyst

This news has been read 5773 times!