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CEFC to Invest $9b in Rosneft
CEFC to Invest $9b in Rosneft

CEFC to Invest $9b in Rosneft

CEFC to Invest $9b in Rosneft

Chinese conglomerate CEFC will buy a 14.16% stake in Russian oil major Rosneft for $9.1 billion from a consortium of Glencore and the Qatar Investment Authority, strengthening the energy partnership between Moscow and Beijing.

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, Reuters reported.

The deal comes as the United States imposes a new round of economic sanctions on Russia, making it difficult for large western firms such as Glencore to develop partnerships and increase ties with state-owned firms such as Rosneft.

Glencore 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 shares without naming the price. A CEFC spokesman said the company would pay $9.1 billion.

Rosneft’s market capitalization stands at $57 billion and the deal makes it one of the largest investments ever made by China into Russia. Glencore and QIA will retain stakes of 0.5% and 4.7% in Rosneft respectively.

Russia tops the list of Chinese crude suppliers where it competes with rival Saudi Arabia, the world’s largest oil exporter.

Glencore and QIA agreed to buy a 19.5% stake in Rosneft in December 2016 for over €10.2 billion to help the Kremlin plug budget holes.

The transaction coincided with expectations of political detente between Moscow and Washington after Donald Trump became US president and pledged to improve ties with Moscow.

Rosneft is run by Igor Sechin, a close ally to Russian President Vladimir Putin, who awarded special state decorations to the head of Glencore, Ivan Glasenberg, for executing the transaction.

Putin also awarded state decorations to the Russian head of Italian bank Intesa SanPaolo, Antonio Fallico, for helping fund the deal with a €5.2 billion loan.

 

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