RUSSIA > China based CEFC to acquire 14.2% stake in Rosneft from Glencore and QIA Consortium for about $9 billion

CEFC logo photoshop

CEFC, a Chinese oil company, is set to buy 14.2% stake in Rosneft from Glencore Plc and Qatar’s sovereign wealth fund with the companies only retaining 0.5 % and 4.7% of their stake respectively. Glencore and Qatar SWF will pay their debt for buying their initial stake for about $12 billion.

This deal is a departure from trend in China that only state- owned China National Petroleum Corp and China Petroleum & Chemical Corporation (Sinopec) that used to buy stakes in foreign energy companies. Considered to be politically important deal, as the Russian President Vladimir Putin awarded the Order of Friendship (a state honor) to the Glencore and Qatari royal Sheikh Abdullah Bin Mohammed Bin Saud Al Thani as well as people involved in the transaction.

Until recently Glencore traded about 400,000 barrels a day from Rosneft but even after the deal it maintains a side-deal with Rosneft to trade Russian crude. Moscow has been the top crude supplier to China and even plans to start a natural gas pipeline by 2019.

About CEFC

Founded by Chairman Ye Jianming in 2002, CEFC is the largest private oil and gas company in China. CEFC presence can be felt in Russia, Central Asia, Central and East Europe, Middle East and Africa. Employing a workforce of nearly 50000, CEFC China has annual revenue of figure exceeding $ 40 billion and has been honored as the Most Influential Chinese Enterprises and Top 10 Most Internationally competitive Leading Chinese Enterprises.

About Rosneft

Rosneft is an integrated oil company majority of which is owned by the Government of Russia. Rosneft is headquartered in Moscow. It became Russia’s leading extraction and refinement company after purchasing assets of former oil giant Yukos at state-run auctions.

Rosneft was established in 1993 as a unitary enterprise with assets previously held by Rosneftegaz (the successor to the Soviet Union’s Ministry of Oil and Gas). About 75.16% of Rosneft is owned by the Russian state, while BP owns a 19.75% stake and around 5% of the shares are floated freely.

As of 2015 it had revenue of $86.9bn and a net income of $5.61bn. Rosneft employs 300,000 people in 24 countries around the world.

About Glencore

Glencore global network includes 90 offices located in over 50 countries around the world and is one of the world’s largest and most diversified natural resource companies. It is the producer and marketer of more than 90 companies and its operations also include 150 mining and metallurgical sites, oil production assets and agricultural facilities. Including contractors, Glencore employs around 160,000 people globally.

About Qatar Investment Authority (QIA)

Founded in 2005 and headquartered in Doha, QIA is structured to operate at the very highest level of global investment. QIA is a world class investor and it adheres to the strictest financial and commercial disciplines and has a strong track record of investing in securities, property, alternative assets and private equity in all the major capital markets as well as emerging markets around the world.