Even before the OPEC/non-OPEC production cuts took effect in January 2017, Russia had already beaten Saudi Arabia to become China’s single largest oil supplier for 2016. Since then, Saudi Arabia has sacrificed still more of its market share in the prized Chinese market, while Russia has dominated Beijing’s top suppliers’ list for most of this year.
Now Russia’s oil giant, Rosneft—whose chief executive Igor Sechin is a close ally of Vladimir Putin—is reportedly aiming to further increase its crude oil deliveries to China, as Russia looks to boost energy ties with the world’s biggest crude oil importer and top driver of global oil demand growth.
Since the OPEC/Russia oil production deal began, the U.S. has stepped up sanctions on Russia, which made Western banks and companies even more cautious in dealing with Russian firms. Considering this, it’s not a huge surprise that Rosneft and Russia want to boost ties with Chinese firms, refiners, and banks.
Although it’s not immediately clear when that increase will take place, this plan is only the latest in a series of projects that boost Russian oil supplies to Chinese refiners. Chinese firms, on the other hand, recently made big investments in Russian energy projects and firms, including in a large stake in Rosneft.
Chinese industrial conglomerate CEFC recently agreed to buy 14.16 percent in Rosneft for approximately $9 billion. The deal didn’t come as a surprise, coming on the heels of a Rosneft announcement regarding the sealing of a strategic partnership deal with CEFC, but it’s clearly indicative of a continuing warming between Moscow and Beijing that gave the former the upper hand in the race for market share with Saudi Arabia.
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