Russian state owned oil giant Rosneft has finalized a $7.5 billion loan agreement with western banks in order to buy a controlling share in fellow Russian energy company Gazprom.

Backed up by the Russian government, its 100% owner, Rosneft has agreed terms on the multi billion dollar loan, which will be used to buy a further 10.7% of gas producer Gazprom’s shares as part of a plan to increase Rosneft’s holding by around 13% to a controlling 51%.

Oil producer Rosneft is believed to have arranged the major financing with a panel of leading western banks including Abn Amro, Dresdner Kleinwort Wasserstein and JP Morgan. The loan will be paid by the end of the year.

To pay back the loan, a public offering of Rosneft shares will be undertaken, while in the short term the loan will be secured against a 49% share in the oil producer.