Rosneft, the Russian state owned oil company, has just been part acquired by Chinese outfit CEFC China Energy.
In a deal that retained the Russian government’s majority stake, commodities trader Glencore and Qatar’s sovereign wealth fund both significantly reduced their Rosneft holdings. Glencore will keep its coveted access to Rosneft oil.
It was only last December when both Glencore and Qatar invested in Rosneft. So it’s odd how quickly they’re reducing their stakes.
One Russian politician believes that the December deal, which was put together rapidly, was only made so that the government could balance that year’s budget. And it makes sense: Russia’s President Putin was so grateful to the pair that he awarded the CEOs medals. Meanwhile, the markets had acted with surprise because Rosneft had been specifically targeted by Western sanctions that hit Russia on the back of the Ukraine conflict.
This new deal was partly driven by the original duo’s desire to repay debt that was used to finance the December acquisition.
Chinese Russian relations
This investment is part of a growing trend: the energy relationship between the 2 is only getting stronger as the West’s gets weaker.
For instance, China is importing increasing amounts of Russian crude oil. And Russia intends to supply natural gas to China soon. Also, the Russians are feeling confident enough to let Chinese CEFC look for oil in Siberia.
Meanwhile, Chinese President Jinping recently called relations between the 2 as “now the best ever.”