CEFC China Energy Buys 14% of Russia’s Rosneft

Chinese energy conglomerate CEFC China Energy Co. agreed to buy a 14.16% stake in Russia’s state-controlled oil major Rosneft for about $9.1 billion, further strengthening energy ties between Beijing and Moscow.

Privately owned CEFC will acquire the stake from a consortium of commodity trader Glencore and the Qatar Investment Authority (QIA). The purchase price reflects a premium of about 16% on the 30-day volume-weighted average price of Rosneft shares on Friday, according to a statement issued by Glencore.

The deal will make CEFC the third-largest shareholder of Rosneft behind the Russian government and the British oil major BP. Rosneft is the world’s largest publicly traded oil producer. Closing is subject to completion of final negotiations and all necessary regulatory approvals, Glencore said.

Glencore and QIA jointly bought a 19.5% stake in Rosneft late last year for $11 billion. Following the CEFC transaction, Glencore will retain a 0.5% stake in Rosneft and QIA, 4.7%.

Sources close to the matter told Caixin that CEFC is seeking to join Rosneft’s board of directors to participate in decision-making.

Established in 2002 by businessman Ye Jianming, Shanghai-based CEFC has expanded rapidly from a fuel trader into an oil and finance conglomerate with businesses including oil and gas production, refineries, logistics, securities and investment banking. With $43.7 billion in 2016 revenue, the company was listed in July as No. 222 among the Fortune 500 largest companies.

CEFC has accelerated overseas investments in recent years with interests in oil and gas assets in the Middle East, Central Asia, and Africa. In February, it acquired 4% of Abu Dhabi’s onshore oil concession from Abu Dhabi National Oil Co. for $900 million. In March, CEFC bought a 19.9% stake in the U.S. securities firm Cowen Group for $100 million to become the largest shareholder.

Last week during the BRICS summit in southern China’s Xiamen city, CEFC signed a strategic cooperation agreement and a long-term oil-supply contract with Rosneft. Under the agreement, CEFC and Rosneft will implement joint prospecting and production projects in Western and Eastern Siberia, as well as future cooperation in oil refining and petrochemical and oil products trade, Russia’s TASS news agency reported.

Contact reporter Han Wei (weihan@caixin.com)