The One Russian Oil Giant China Simply Refuses To Deal With

China’s state oil and chemicals company Sinochem doesn’t want to have anything to do with crude oil related in any way to Russian oil giant Rosneft or any of its subsidiaries, as U.S. sanctions on two Rosneft units for trading Venezuelan crude are kicking in in May, Reuters reported on Monday, citing two sources familiar with the plans and documents it has reviewed.  

Last month, the United States slapped sanctions on a Geneva-based trading unit of Rosneft, saying that the company Rosneft Trading has been helping Nicolas Maduro’s regime to evade sanctions and to continue selling oil to keep the Venezuelan regime alive.

In response to the sanctions, Rosneft said in a statement in February:

“The sanctions announced by the U.S. Treasury Department against Rosneft’s subsidiary RTSA and its Chairman are illegal, unjustified, and an act of legal abuse.”

Then earlier this month, the US targeted another Rosneft subsidiary that had picked up the PdVSA oil mantle.

The U.S. Treasury has given companies worldwide time until May 20 to wind down operations with Rosneft Trading, otherwise they risk secondary sanctions for continued dealing with the company sanctioned by Washington.

It looks like China’s Sinochem has chosen not to side with Russia in this matter, despite close China-Russia relations. 

Related: Big Oil Is Literally Burning Cash In The Permian

According to one of Reuters’ sources, the Chinese company is steering clear of any Rosneft or Rosneft-related trade with oil because it fears that the U.S. could widen sanctions to Rosneft companies other than Rosneft Trading.

In a tender looking to buy crude oil on Monday, Sinochem explicitly said that the crude it would purchase should not come “from or related to Rosneft Oil Company and its subsidiaries and affiliates”, a document seen by Reuters shows. 

Sinochem shunning Rosneft’s oil comes at a time in the new oil price war between Russia and Saudi Arabia, former allies turned foes which now promise to flood the market with oil in a renewed battle for market share in every corner of the world.

By Tsvetana Paraskova for Oilprice.com

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