The Russian oil giant, Rosneft has agreed to a giant US$ 270 billion deal with China, which will see the Russian company deliver an additional 300 000 bpd for 25 years starting in the latter half of this decade.
This significant deal is solid evidence of the Kremlin’s move to refocus its hydrocarbon exports towards Asia and away from an economically weakened Europe. According to Reuters, the agreement ‘highlights a growing partnership between China, the globe’s top energy consumer, and Russia, the largest oil producer, and comes despite previously uneasy relations between Rosneft and Beijing over energy pricing.’
The value of the deal was based on current prices for oil; According to Russian President Vladimir Putin the deal's size “is absolutely unprecedented” and will net Rosneft some US$ 60 – 70 billion in upfront charges; industry analysts had earlier predicted this figure to be somewhat lower (although still significant) at US$ 30 billion. Either way, this will come as a boon to Rosneft, which has seen its debt burden rise significantly after the recent purchase of TNK-BP.
Russia already supplies China with 300 000 bpd, so the new deal would see this figure doubled; Putin was also noted as saying that Russia could ultimately provide China with 900 000 bpd.
Edited from various sources by David Bizley
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