Chinese energy conglomerate CEFC is buying a 14.16% stake in Russian oil major Rosneft from the current consortium that owns a large stake.
The move signifies a further strengthening of the energy partnership between Russia and China.
Glencore, one of the two partners of the consortium, 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’s shares.
The deal has yet to close pending final negotiations and on receipt by CEFC of all necessary regulatory approvals, Glencore said.
Glencore and the other partner, which together bought a Rosneft stake of around 19.5% last year, will retain stakes of 0.5% and 4.7% respectively, Glencore said.
Commenting on this major energy market deal, Christian Boermel, senior analyst – Russia Upstream Oil & Gas at consultancy firm Wood Mackenzie, said, “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.”
“Rosneft keeps its customers close to its heart – buy a stake, get an oil supply agreement,” Boermel told arabianoilandgas.com in an e-mailed comment.
CEFC China Energy has grown in recent years from a niche oil trader into a sprawling energy conglomerate and the transaction will allow China, the world’s second largest energy consumer, to boost cooperation with the world’s top oil producer.
In February this year, CEFC successfully bid for and won a 4% share of Abu Dhabi’s primary onshore oil concession – the ADCO acreage of ADNOC – in a deal values at $888mn.
“CEFC China could soon take stakes in Rosneft projects, either in cash-intensive upstream projects, or in the downstream (sector),” Boermel said.
The deal comes as the United States imposes a new round of economic sanctions on Russia making it difficult for large Western firms like Glencore to develop partnerships and increase ties with state-owned firms such as Rosneft.