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Breaking News:

OPEC Lifts Production in February

Chinese Energy Conglomerate Begins Talk to Buy Rosneft Shares

A Chinese energy conglomerate is in early talks to buy a stake in Russian energy giant Rosneft, according to exclusive sources who spoke to Reuters.

Senior executives at both firms have begun negotiations regarding a deal, the sources told the news agency. Already, CEFC China Energy chairman Ye Jianmin and Rosneft CEO Igor Sechin have held two meetings regarding future agreement.

Reuters sources did not reveal information on the cost of the deal, but one source suggested Rosneft would be open to selling the Chinese company a portion of its retail business, which includes 150 storage facilities, as well as thousands of filling stations and gasoline tankers.

CEFC plans to expand its influence by becoming an international energy company through its involvement with Russian oil and gas companies.

So far, Rosneft has sold a 19.5 percent stake to Glencore and the Qatar Investment Authority (QIA—a sovereign wealth fund) for $11.8 billion. Both Glencore and the QIA told The Wall Street Journal that the deal’s details did not include a right for Russia to buy back Rosneft shares from the Glencore-QIA consortium they had formed for the deal.

British Petroleum owns 19.75 percent of the company. An additional sale of shares that would reduce the Russian government’s ownership to below 50 percent would require a special governmental decree.

"We consider the Chinese market as the most promising and actively developing. The company will increase its cooperation with Chinese partners in all business areas and make public statements accordingly as joint projects are developing," the company told Reuters over email.

Related: Oil Futures Point To Higher Oil Prices

Russia supplies the most oil to China of all of the country’s most prominent suppliers, including OPEC leader Saudi Arabia.

Beijing Gas attempted to purchase a 20 percent stake in Rosneft last year but it is unclear if that deal went through.

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By Zainab Calcuttawala for Oilprice.com

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