The Russian government has refused to fund four of five projects submitted by state-owned oil company Rosneft. The news, announced by the Russian minister of economic development Alexei Ulyukayev on the sidelines of a meeting of economic ministers of Asean countries in Kuala Lumpur, adds urgency to Rosneft’s need for financing its Siberian projects. The company’s large debt and the lowest oil prices in six years are taking a bite out of its finances.

Rosneft had applied to the National Welfare Fund for the financing of five projects, including the Russkoye and Yurubcheno-Tokhomskoye oilfields, the Rospan gas project, the Angarsk petrochemical plant and the Zvezda shipyard, for a total R301bn (US$4.3bn). Only the latter project could still receive the necessary R89bn (US$1.3bn) funding, upon approval of the finance ministry.

According to Liza Ermolenko, emerging market economist at Capital Economics, the news is not surprising. “Given where oil prices are, policymakers are already struggling to make ends meet and have had to implement a huge fiscal squeeze. This is bad news for Rosneft of course – it is effectively locked out of international financial markets and borrowing at home is very expensive,” she tells GTR.

Rosneft can still be looking for funding through international partnerships. “Many Russian companies are now trying to establish new relationships – or strengthen old ones – in order to fill in the void created by Western sanctions, but also for political reasons to show that Russia is not dependent on the west and has friends elsewhere. The problem is that Russian companies are now in a very weak bargaining position, so the deals they can get are probably not the most favourable ones. The most obvious example is Gazprom’s deal with China National Petroleum Corporation, where the price was never disclosed, presumably because it was not the best price for Russia,” says Ermolenko.

The Russian presidency’s press service has already announced that Rosneft is in talks with UAE company Mubadalya Petroleum for the development of the two fields in Eastern Siberia. The partnership is set to be discussed in the context of energy cooperation talks between President Vladimir Putin and Crown Prince of Abu Dhabi Mohammed Al Nahyan, who is currently visiting the country.

Privatisation would also be an option for Rosneft. Ulyukayev did not give in to the media when pressed to provide details regarding privatisation programmes expected in 2016, and whether they would involve Gazprom and Rosneft, but admitted that it was a possibility.