Russia's state-owned oil firm plans biggest IPO

Russia's state-owned oil company is preparing what may be the world's biggest share offering as early as October.

Rosneft, which pumps more oil than Algeria, may offer as much as US$20 billion ($31.16 billion) of stock on domestic and foreign markets as President Vladimir Putin seeks to build the Moscow-based company into one of the world's biggest oil producers.

Economy Minister German Gref said an offering of more than the originally planned US$15 billion might take place then. "There are some technical difficulties and we are now working to solve them."

Putin is building Rosneft and gas company Gazprom into energy producers big enough to compete with companies such as Exxon Mobil. Rosneft tripled output to 1.5 million barrels a day in 2005 after acquiring what was once Yukos Oil's biggest production unit. The Government seized and sold that unit to recover some of Yukos' US$28 billion in back-tax bills.

In November, Rosneft delayed plans to buy out minority shareholders in its units, raising concern among investors and analysts that the IPO might be pushed back to 2007. DoCoMo's US$18.4 billion sale in 1998 remains the world's largest IPO, followed by Enel's US$17 billion offering a year later.

Rosneft needs cash to cut the US$11 billion of debt it had as of September so it can invest in new projects.

- BLOOMBERG