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A day after giving himself exclusive say on fate of the oil giant's privatisation, President Vladimir Putin ordered the government to proceed with plans to reduce the state's stake in Rosneft to 50%+1.

As Putin retakes the presidency, and Prime Minster Dmitry Medvedev has buit his new cabinet, the fate of the state's share in Rosneft - a lynchpin in the wider privatisation programme - has been dancing the hokey cokey this week.

Putin signed a presidential decree dated May 22 calling for the government to source budget revenues by selling stakes in energy companies held by state-owned Rosneftegaz. The company holds the entire state stake of 75.16% in Rosneft as well as a 10.7399% in Gazprom.

On May 23 however, Putin placed the state's golden share in Rosneft on the list of strategic assets that cannot be privatized. Whilst that gives him, as president, the final say on full privatisation of the company, it also paves the way for reducing the state's stake without threat of losing control, which could impair the oil giant's credit rating.

The government is believed to be considering initially selling a 15% stake in Rosneft, while aiming to reduce to 50% +1 by 2014. Igor Sechin, the newly appointed CEO of Rosneft has said he opposes any privatisation of Rosneft whilst the market price is below that of the IPO in 2006.

However, with oil prices starting to slide after hitting record levels, there may be equally good arguments for pushing on with the sale in 2012. At the same time, the government needs to source additional revenue to fund extravagant spending promises made by Putin during his election campaign. Rosneft's current market capitalization is around $66bn, which pitches a 15% stake at $9.9bn.