Russian oil giant Rosneft and CEFC China Energy Company Limited
signed a Strategic Cooperation Agreement to develop projects in Western
and Eastern Siberia and a contract for the supply of Russian crude oil,
Rosneft said.
Rosneft CEO
Igor Sechin and CEFC China President
Chan Chauto signed the documents at the 9th BRICS summit, Rosneft said in a press release on September 3.
The Strategic Cooperation Agreement suggests developing joint
exploration and production projects in Western and Eastern Siberia and
represents an evidence of an integrated approach of the Chinese
corporation to its cooperation with Rosneft, the Russian oil company
said, adding that the agreement also provides for a joint activity in
such areas as refining, petrochemicals and crude and product trading.
Kirill Tachennikov, senior oil and gas analyst at
BCS Global Markets in Moscow, told New Europe on September 5 that "East
Siberian projects are capital intensive due to investments in
infrastructure, and Rosneft having significant debt burden is interested
in sharing capex with foreign investors not impacted by sanctions”.
Rosneft and its CEO
Igor Sechin, are subject to
sanctions imposed after Russia’s annexation of Crimea from Ukraine in
2014 and Russia’s involvement in Eastern Ukraine. The sanctions have
affected Rosneft’s ability to borrow abroad. The United States imposed
new sanctions on Russia in July, which were in part a response to
conclusions by US intelligence agencies that Moscow meddled in the 2016
US presidential election.
However, Tachennikov explained that for the main projects Rosneft has
already sold part of stakes to Chinese investors last year. "This time
CEFC is in talks about buying a stake in the company’s retail and
distribution business, which Rosneft wants to extract into separate
entity and develop jointly with foreign partner. Probably oil supply
contract is used to secure interests of the potential buyer,” the senior
oil and gas analyst at BCS told New Europe.
In addition, at the BRICS summit Rosneft and CEFC signed a contract
for the supply of Russian crude oil, opening up new opportunities for
the strategic partnership, Rosneft said, adding that this contract will
lead to an increase in direct supplies of crude oil to the strategic
Chinese market and ensure a guaranteed cost-efficient export channel for
Rosneft’s crude sales. The agreements are subject to Rosneft’s
corporate approvals.
"We continue our work on strengthening the relationship with our
strategic partners, including certainly CEFC, the largest Chinese
private energy company, aiming for a long-term cooperation in all the
areas of Rosneft’s business activity,” Sechin said. "The agreements
signed today fully reflect the Company’s strategy, which priorities
includes strengthening the relations with the Asia Pacific countries
and, in particular, with China,” the Rosneft CEO added.
For his part, Chan said he is convinced that the Russian oil and gas
sector has "a tremendous potential” and interested in an integrated
cooperation with Rosneft. "We will use our trading capability and build
up the supply of Russian crude to the fast-growing Chinese market. In
addition, we are planning joint investments in the strategically
important projects in the Russian oil and gas sector,” he said.
by Kostis
Geropoulos - Energy & Russian Affairs Editor, New Europe
https://www.neweurope.eu/article/not-impacted-sanctions-russia-china-ink-siberian-exploration-deal/