By Henry Foy and Max Seddon - Moscow Javier Espinoza - London
CEFC China Energy is in talks to invest in Russia’s state-controlled oil company Rosneft, in what would be a sign of strengthening economic ties between Moscow and Beijing as relations deteriorate with the US.
CEFC, a private conglomerate with interests in the energy and financial services sectors, has been negotiating a deal to invest in the world’s largest publicly listed oil producer that could be announced as soon as this week, say four people with knowledge of the talks.
If agreed, the complex agreement would mark a growing corporate relationship between China and Russia that has focused on cross-border energy deals. This has strengthened this year against the backdrop of increasingly acrimonious ties between Moscow and the west, involving sanctions levied against big Russian companies, including Rosneft.
“Rosneft sees this as a good idea for both strategic and simple business reasons. With the current tensions with the US, they can use it to show that there are other places to find friends,” said one of the people, who was not permitted to speak to the media.
As part of the talks, CEFC is in discussions with NNK, an independent Russian oil company headed by Eduard Khudainatov, an ex-Rosneft chief executive, to form a joint venture related to the investment, three of the people told the FT on condition of anonymity.
Rosneft and CEFC had hoped to announce the deal as early as this week, the people said, adding that its complexity could mean it is delayed or even falls through. They said that the Russian company was keen to reach an agreement during an economic summit this week in Vladivostok, which Moscow is seeking to use as a showcase for its expanding Asian relationships.
When asked by reporters this week if Rosneft could gain new shareholders, Igor Sechin, chief executive, said the reporters “should ask them the question”. CEFC declined to comment, while NNK did not respond to a request for comment.
Britain’s BP holds a 19.75 per cent share in Rosneft, while 19.5 per cent is held by QHG, a holding company controlled by the Qatar Investment Authority and Glencore. The Russian state holds a 51 per cent controlling stake. Glencore and QIA declined to comment.