CEFC China Energy to acquire 14.16% stake in Rosneft for $9bn

CEFC China Energy Company has agreed to acquire 14.16% stake in the share capital of Russian state-controlled firm Rosneft Oil Company from a consortium involving Glencore and Qatar Investment Authority (QIA) for around $9bn.

The transaction has received the preliminary approval from the National Development and Reform Commission of China, and is consistent with CEFC’s strategy of investing in oil and gas development in Russia, Central Asia, Central and East Europe, Middle East and Africa.

The proposed investment is seen as strengthening of cooperation between Russia and China in the oil and gas space, at a time when Russia is facing economic sanctions from the US, forcing Western energy companies to re-align their investment strategies in Russia.

CEFC China Energy Company board chairman Ye Jianming said: "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.

"Through the transaction, CEFC intends to strengthen its position in the oil and gas sector by adding 2P reserves of more than 20 billion barrels.

“CEFC China looks forward to further in-depth cooperation with Rosneft. By bridging Rosneft and the Chinese market and promoting the bilateral cooperation, CEFC China will better serve the energy demand of China.”

Glencore and QIA will continue to hold an economic interest in Rosneft shares, amounting to around 0.5% and 4.7% respectively.

The closure of the deal is subject to final negotiations and the receipt of regulatory approvals.

Earlier this month, CEFC signed a strategic cooperation agreement with Rosneft to develop joint exploration and production projects in Western and Eastern Siberia.

In addition, the companies reached a contract for the supply of Russian crude oil.

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Image: Rosneft headquarters, Sofiyskaya Embankment, Moscow. Photo: courtesy of NVO/Wikipedia.