* Russia preparing to sell stake in top oil firm
* Deal should be completed by Dec. 5 - decree
* Rosneft could buy own shares from state holding
* Kremlin aide says other investors could take part
* Rosneft may buy only part of its stake - sources (Adds sources, background)
By Darya Korsunskaya
MOSCOW, Nov 29 (Reuters) - Russia has instructed its top oilproducer Rosneft to submit proposals for itsprivatisation by Dec. 1, keeping Moscow on track to receivefunds from the sale by the end of the year.
The government is preparing to cut its stake in Rosneft byselling 19.5 percent of state energy holding Rosneftegaz's 69.5percent stake in Rosneft in a potentially complex deal that isdue to be completed by Dec. 5.
"I have sent a letter to Rosneft management ... for them todraw up proposals on privatisation options by Dec. 1," Kremlineconomic aide Andrey Belousov, who also chairs Rosneft's boardof directors, told reporters on Tuesday.
Russian officials have said an option whereby Rosneft buysback the 19.5 percent stake this year would be a "transitoperation" for the budget to receive privatisation funds thisyear, preventing the country's budget deficit from widening.
Rosneft should then resell that 19.5 percent stake in thefirst quarter of 2017.
A banking source and a source close to Rosneft said that thecompany may buy only a part of its stake set for privatisation,which the banking source called a 'left-over' if a strategicinvestor or investors decide not to buy the entire 19.5 percentstake. Rosneft declined to comment.
Belousov said if Rosneft were to buy back its own sharesfrom Rosneftegaz this year, it should hold a board meeting tovote on the move. If another investor were to appear, thenRosneftegaz should hold a board meeting.
Rosneftegaz's board is chaired by Igor Sechin, theinfluential chief executive of Rosneft.
Belousov added that one or several investors could take partin Rosneft's privatisation, but did not elaborate.
The sale of the stake in Rosneft is expected to bring inaround 711 billion roubles ($11 billion) for the Russian budgetat a time when revenues are depressed due to weak prices foroil, which is the country's main export.
Sources told Reuters this month that Rosneftegaz could helpRosneft to partially fund a possible share buyback.
Rosneft's board also approved a domestic bond programmeworth 1.071 trillion roubles this month, although a companysource said at the time Rosneft does not plan to use funds yetto be raised from bonds to finance its own privatisation.($1 = 64.9885 roubles) (Writing by Katya Golubkova; Editing by David Evans andAlexander Smith)
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