Unknown Oil & Gas Deal Just Changed The Global Energy Balance
One of the biggest energy stories this year has been Russia’s Rosneft buying India’s Essar Oil — giving the Russian company a firm grip on one of the world’s biggest emerging oil and gas markets.
And this past week, that story got more complex. With Rosneft striking another big deal — drawing in another heavyweight energy nation.
China.
Rosneft announced Friday it is selling a significant chunk of its equity to Chinese investors. In this case, little-know exploration and production firm CEFC China Energy.
Although few investors know CEFC, the company is bringing significant capital to the deal. With the firm agreeing to pay $9 billion to acquire a 14.16 percent stake in Rosneft.
The deal is historic in being the first major buy-in by China into the Russian oil and gas sector (although Chinese firms have been involved in financing LNG export projects in the Russian Arctic). Showing the strength of the ever-growing ties between Russia and China in the energy space.
Rosneft and CEFC have been at the center of that burgeoning relationship. With the two companies having signed a deal this past September for long-term supply of Russian crude into China.
This week’s equity purchase further cements those business ties. And shows that China sees Russia as a critical ally in the energy game going forward.
That’s a critical development for the world energy picture. Given that Chinese companies haven’t directly gained much access into India — despite the nation being one of the most important emerging players on the energy stage.
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