November 21, 2013 [Reuters] - Russian state-controlled energy major Rosneft is in talks with Morgan Stanley on buying a stake in the Wall Street bank's oil trading business, industry publication SparkSpread reported on Tuesday.
The talks are at an advanced stage but could still fall apart, the SparkSpread website said, citing an unidentified source.
Morgan Stanley has been trying to sell or spin off its physical commodity business for over a year as it faces increased regulatory pressure and higher capital requirements.
A Morgan Stanley spokesman in New York declined to comment. A spokesperson for Rosneft could not immediately be reached for comment.
Morgan Stanley is the biggest physical oil trader on Wall Street, and its commodity arm owns TransMontaigne Inc, an oil storage and terminal firm with assets in the United States and Mexico.
The Federal Reserve has been reviewing Wall Street’s role in physical commodity trading and is considering placing greater restrictions on the ownership and operation of trading assets such as storage tanks and pipelines.
Rosneft is Russia’s top oil producer and is headed by Igor Sechin, a powerful ally of Russian President Vladimir Putin. The Russian state owns a 69.5 percent stake, according to its website.
Rosneft became the world’s biggest listed oil producer in March after the $55 billion acquisition of Anglo-Russian oil firm TNK-BP. Its oil output accounts for over 40 percent of the total in Russia, the global leader in crude production.
Morgan Stanley was in talks with Qatar’s investment authority last year regarding the sale of its physical trading arm, but a deal never materialised.
