Chinese conglomerate CEFC will buy a 14.16% stake in Rosneft for $9.1 billion from a consortium of Glencore and the Qatar Investment Authority. The deal will strengthen the energy partnership between Moscow and Beijing, amid increasing tensions with the United States.
CEFC China Energy’s transaction will allow China, the world’s 2nd largest energy consumer, to boost cooperation with the world’s top oil producer.
The deal comes as the United States imposes a new round of economic sanctions on Russia.
Rosneft CEO Igor Sechin told that the deal was prompted by the desire of both Glencore and QIA to reduce onerous debt repayments.
Sechin said Glencore and QIA were holding onto the part of Rosneft they bought in December 2016 with their own cash, while selling the amount funded by credit.
Glencore said in a statement that CEFC will buy shares at a premium of around 16% to the 30-day volume weighted average price of Rosneft shares without naming the price.
Glencore and Qatar will use the proceeds to pay down the debt they contracted to buy their initial stake just 9 months ago.
Glencore and QIA will retain stakes of 0.5% and 4.7% in Rosneft respectively.
Privately-held CFEC was founded in 2002 and has since expanded from a small fuel oil trading operation into one of the largest private companies in China, owning assets in Asia, Europe and Africa.
The company has recently established several stakes in other markets.
In February CFEC received a 4% stake in an onshore venture with Abu Dhabi national oil co, and in March the company purchased a stake in the broker Cowen Group Inc.
CFEC Chairman Ye Jianming commented on the sale «We are delighted at the opportunity of becoming a strategic shareholder of the world’s largest public oil producer and to develop strategic cooperation with Rosneft across the board in exploration, refining, storage, logistics, and sales of the upstream oil and gas resources. The transaction will consolidate and elevate the position of CEFC China in the oil and gas sector with incremental 2P reserves of more than 20 billion barrels.»
«This deal intensifies the energy relationship between Russia and China. A direct stake in Rosneft will make CEFC China the main driver for the relationship of Rosneft with China, ahead of CNPC, Sinopec and Beijing Gas», Wood Mackenzie analyst Christian Boermel said. «Rosneft keeps its customers close to its heart – buy a stake, get an oil supply agreement. CEFC China could soon take stakes in Rosneft projects, either in cash-intensive upstream projects, or in the downstream».
To read the full story in Russian.