Either way, there is no denying that Rosneft is an overnight sensation. Two years ago, the state-owned oil company was producing fewer than a half-million barrels per day. Now that number has spiked to 1.5 million.
And if Rosneft's president is good for his word, that output is set to double over the next decade to 3 million barrels a day as the company moves to develop oil fields in Sakhalin.
Speaking on April 24 at the Russian Economic Forum in London, Rosneft President Sergei Bogdanchikov claimed that the company could be the world's largest oil producer by 2015.
Soros Warning On Ethical Issues
It's an enticing prospect that comes as world oil prices skyrocket to historic levels. But not everyone will be lining up to buy shares. In an opinion piece published in the "Financial Times" on April 26, the billionaire financier George Soros warned the IPO "raises serious ethical and energy security issues" at a time when Europe is seriously questioning its energy dependence on Russia.
The critique from Soros was followed by an even stronger gesture from a powerful London financial firm. F&C Asset Management has reportedly advised investors to avoid the Rosneft IPO as an unacceptably risky venture.
Many Rosneft detractors point to the fate of Russia's former oil superstar, Yukos. Rosneft's star has risen as Yukos has been systematically stripped of its assets following what many consider the politically motivated arrest and prosecution of its chief, Mikhail Khodorkovsky.
Yuganskneftegaz Takeover
In particular, critics are uneasy about Rosneft's takeover of Yuganskneftegaz, Yukos's largest production unit, after Khodorkovsky was jailed for fraud and Yukos was hit with $28 million in tax claims.
Yuganskneftegaz is now Rosneft's biggest asset, and its purchase helps explain how the company has managed to triple its output since 2004. But the circumstances of the acquisition were opaque. Some investors are questioning whether it is ethically and legally palatable to vie for shares of what critics say is essentially stolen property.
Not everyone is troubled by such doubts, however. Powerful financial firms like Morgan Stanley and JP Morgan Chase are acting as advisers on the Rosneft IPO, and Rosneft recently hired its first full-time Western executive, an American investment adviser, to lead strategic investment projects and external financing.
During Bogdanchikov's appearance at the Russian Economic Forum, the talk was of a potential oil-production bonanza -- and not, as one paper described it, "the specter of Yukos."
Bogdanchikov has refused to state precisely the size of the IPO. But earlier announcements stated that 49 percent of the company shares would be up for offer.
Bogdanchikov has said foreign strategic buyers are welcome to a major stake as long as the state maintains control over Rosneft. India's state-owned oil and gas company ONGC and China's national energy firm CNPC have been named as potential buyers.
But as investors prepare for the planned flotation on the London Stock Exchange, there are fears a successful IPO will only serve to legitimize the Kremlin's apparent willingness to seize Russia's energy assets by any means possible.
A $20 billion payoff may be seen as a reward for Russian President Vladimir Putin and his advisers -- notably Igor Sechin, now the head of Rosneft's board of directors -- for their crackdown on Yukos and Kremlin critic Khodorkovsky.
It may not be enough to deter investors, but for policy analysts, it's a dire concern. As the Economist Intelligence Unit recently asked: "Having got away with it once, what is to stop Russia’s authorities from doing something similar in the future?"
