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Chinese conglomerate CEFC will buy 14.6% from Rosneft for 9.1 billion USD

RosneftChinese conglomerate CEFC will buy 14.6% of the Russia’s oil giant Rosneft for 9.1 billion USD from a consortium between Glencore and the Qatar Investment Authority (QIA), further strengthening the energy partnership between Moscow and Beijing.

In recent years, CEFC China Energy has become a niche oil giant in an expanding energy conglomerate. The deal will allow China – the world’s second-largest energy consumer – to strengthen its co-operation with the world’s leading oil producer. The deal is happening at a time when the US has imposed new economic sanctions on Russia, hindering major Western companies such as Glencore in developing partnerships and strengthening relations with state-owned companies such as Rosneft.

Glencore said in a statement that CEFC will buy shares with a premium of about 16% on the 30-day weighted average price of Rosneft’s shares without calling the price. A spokesman for CEFC, however, said the company would pay 9.1 billion USD.

Rosneft’s market capitalization is now 57 billion USD and the deal is one of the largest investments of China ever made in Russia.

Glencore and QIA will hold shares of respectively 0.5% and 4.7% in Rosneft. The two companies bought 19.5% of Rosneft in December 2016 for more than 10.2 billion EUR, helping the Kremlin to fill its budget holes.

The Kremlin is trying to strengthen its relations with China, especially since the West imposed large-scale sanctions on Moscow to punish it for the annexation of the Crimea and its intervention in East Ukraine in 2014.

Russia is the largest crude oil supplier in China, where it fights its rival Saudi Arabia, the world’s largest exporter of oil.