Russia’s state-controlled oil giant Rosneft and Chinese energy company CEFC—which has agreed to buy 14 percent in Rosneft—are deepening their strategic cooperation by signing an agreement to study the possible construction of a petrochemical facility in China’s Hainan province.
Rosneft and CEFC will set up joint working teams “to discuss technical configurations of the project as well as commercial and economic matters,” the Russian company said in a statement on Friday.
The two companies plan to conduct a joint analysis of long-term supply of feedstock for the petrochemical facility in Hainan and to explore various options for monetizing the products, Rosneft noted.
The joint petrochemical project would be the latest sign of closer ties not only between Rosneft and CEFC, but also between Russia and China.
In early July, Rosneft and CEFC signed the strategic cooperation deal to collaborate in exploration and production, oil refining and petrochemicals, crude oil and product trading, retail business, and financial services. The companies also agreed to consider the potential for setting up a vertically integrated joint venture in Russia to implement oil and gas projects, and a joint investment fund.
In September, CEFC agreed to buy 14.16 percent in Rosneft for some US$9 billion. The deal didn’t come as a surprise, coming on the heels of the strategic partnership deal, but it’s clearly indicative of a continuing warming between Moscow and Beijing that gave the former the upper hand in the race for oil market share with Saudi Arabia.
Last month, Rosneft was said to be aiming to almost double its crude oil exports to China through Kazakhstan, while Chinese refiners are preparing to receive increased volumes of Russian crude oil via the Eastern Siberia Pacific Ocean (ESPO) starting in January next year, when the expansion of the capacity of the ESPO pipeline—which branches out to China—will be complete.
While higher crude oil volumes flow from Russia to China, the Chinese are stepping up investments in Russian energy companies and projects.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.