Glencore will acquire nearly half of Russian oil company Russneft.
Russneft is one of the largest oil producers in Russia, and has revenues of around US$5.1 billion.
The all scrip acquisition comes in spite of the weaker oil price.
According to Reuters, Russneft owner Mikhail Gutseriyev announced the deal yesterday on Rossiya 24, adding that the deal is awaiting approval from Russia’s competition regulator.
The deal is reportedly part of a debt settlement, with the Russian energy company currently owing US$984 million.
Glencore has long had a hand in Russneft, coming in as a major financier for the venture when it was developed in 2002, according to The Financial Times.
Since that time Russneft has repaid Glenore more than $1.2 billion.
In 2013 the two companies agreed to convert a minimum of $900 million of the outstanding debt into an equity stake, although this was supposed to come to fruition last year.
However no agreement could be reached on the debt situation.
These negotiations have now come to a head with “the outstanding loan balance and/or any equity resulting from the conversion to shares in Russneft has been pledged as a guarantee for a loan between Russneft and a third party bank,” Glencore said in its results.
Earlier this month Glencore also announced it would reduce its focus on oil exploration around its assets in Guinea and Chad, despite a forecast 10 per cent increase in the oil price and general growth predicted towards the end of the year