Morgan Stanley has signed an agreement with a subsidiary of
Rosneft Oil Company to sell the Global Oil Merchanting unit of its Commodities division. Financial terms of the transaction were not disclosed.
The sale includes a dispersed international network of oil terminal storage agreements; inventory; physical oil purchase, sale and supply agreements; equity investments; and freight shipping contracts.
Approximately 100 front-office executives in the U.S., UK and Singapore, or one-third of Morgan Stanley’s total commodities front-office personnel, will move to Rosneft Group as part of the transaction.
Morgan Stanley’s oil merchanting business engages in the global storage, trading and transportation of oil and refined products. The transaction does not include Morgan Stanley’s client-facilitation oil trading business; its ownership stake in U.S.-based oil storage, marketing and transportation company
TransMontaigne; or any of its commodities operations outside of the oil sector. The firm says it is currently exploring strategic options for its stake in TransMontaigne.
Morgan Stanley’s non-controlling 49 percent stake in
Heidmar Holdings LLC, which manages pools comprising a fleet of approximately 100 independently owned commercial tankers, is among the oil-related investments being transferred to Rosneft.
Commenting on the transaction,
Igor Sechin, Rosneft President and Chairman of the Management Board, said: "The agreements reached today represent a breakthrough in strengthening Rosneft’s Commerce and Logistics Unit, which will spearhead the Company’s growth in the international oil and products markets creating substantial incremental synergies based on Rosneft’s unique position as the leading oil and gas company and Morgan Stanley’s Global Merchanting Unit’s geographical reach and depth of “supplier – customer” commercial relationships. The transaction will deliver increased value for Rosneft’s equity barrels by going deeper into the merchanting value chain, while equally enhancing the visibility of global oil and products markets and opening up new revenue streams by accessing third party barrels."
The transaction is subject to, among other conditions, regulatory approvals in the U.S., the E.U. and certain other jurisdictions. It is expected to close in the second half of 2014.
Rosneft is a Russian oil industry leader and the largest public oil and gas company in the world. Rosneft’s main operations are exploring for and producing oil and gas and producing and selling petroleum products and petrochemicals.
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services.
