The investment banks that managed last month's contentious initial public offering (IPO) of Russian state-controlled group Rosneft have decided to exercise an option to buy 31 million shares at the original offer price, above current market levels.

Shares in Rosneft, which trade as global depositary receipts in London, have closed at or slightly below $7.55 (€5.93) a share - the level at which they were offered - in 17 of the past 22 trading days. They have also underperformed the European oil and gas sector by 2 per cent over the past month.

Despite this, ABN Amro Rothschild, Dresdner Kleinwort, JPMorgan and Morgan Stanley - the joint global co-ordinators and bookrunners - have said they would pay $232 million, or $7.55 a share, for 31 million of the 53 million shares they were entitled to buy through the so-called over-allotment option.

The decision partially to exercise the over-allotment option, also known as the greenshoe, boosts the size of the total IPO to $10.6 billion, according to the company. That means the Rosneft offering is now the fifth-largest IPO in the world.