Glencore, Vitol in $10 Billion Loan to Buy Rosneft Crude

Commodity traders Glencore International and Vitol have asked banks for a $10 billion syndicated loan to finance the purchase of up to 67 million tons of crude oil from Russian group Rosneft, bankers said on Monday.

Rosneft agreed long-term crude supply contracts with Glencore and Vitol in December. The contracts could be worth around $50 billion, one of the bankers said.

The loan, which will be one of the biggest pre-export trade financings, will use Rosneft's future oil exports as collateral, bankers said.

Glencore and Vitol are arranging the loan and asked banks to commit $500 million each and to express willingness to lend more. The two companies have pledged to commit $4 billion to the loan, a second banker said.

Glencore, Vitol and Rosneft declined to comment.

Bank of America Merrill Lynch and Citigroup are helping Glencore and Vitol co-ordinate the loan, the second banker said.

Rosneft exposure

The use of Rosneft's future oil exports as collateral means banks view the loan as direct Rosneft risk although the loan is being raised by Glencore and Vitol.

While Glencore and Vitol were expected to be able to raise most of the money, some banks may find it difficult to lend because of existing exposure to Rosneft.

Rosneft's top banks already have more than $1 billion exposure each to the Russian oil giant, which is in the process of completing a $29.8 billion acquisition loan to buy rival TNK-BP.

Rosneft was expected to sign a $13 billion loan on Jan. 31 to buy 50% of TNK-BP from the AAR consortium after inking a $16.8 billion loan to buy BP's 50% stake at the end of December.

Rosneft asked banks to prioritise lending to its acquisition financing over lending to the new $10 billion pre-export financing in a letter last week, bankers said.

The pre-export financing was expected to be completed after Rosneft's current $13 billion loan is closed in mid-February.