Rosneft is seeking to borrow up to $30 billion (R265bn) from China in exchange for possibly doubling oil supplies, making Beijing the largest consumer of Russian oil and further diverting supplies away from Europe.
Four industry sources familiar with the situation said yesterday that Rosneft was in talks with China’s state-owned company CNPC about the borrowing, which would echo a $25bn deal the companies clinched in the last decade. Back then, Rosneft and Russian pipeline monopoly Transneft borrowed money to help Rosneft acquire the assets of oil producer Yukos, while agreeing to build a pipeline to supply China with 300 000 barrels per day for 15 years.
This time, Rosneft wants to borrow money as it is close to completing a $55bn acquisition of rival TNK-BP to become the world’s largest oil producer among publicly-traded firms.
Russia’s leading oil company, controlled by the Kremlin, was considering ultimately doubling supplies to China, sources said.
“It can be a combination of delivery options. The strategic line is to increase supplies to China,” one source familiar with the situation said. “The reason why China is willing to lend is simple. They sit on over $3 trillion in reserves and are looking to diversify their investments,” he said, referring to China’s foreign exchange reserves of $3.3 trillion.
The first loan-for-supply deal between the two companies connected directly for the first time the world’s largest energy producer and consumer.
It came after a number of energy disputes between Russia and its neighbours, which cut gas and oil supplies to Europe several times, drawing criticism and calls from the EU for diversification away from Russian energy resources. – Dmitry Zhdannikov and Vladimir Soldatkin in London and Moscow for Reuters