A mostly-state-owned Chinese oil company agreed recently to buy a minority stake in Rosneft from Glencore and the Qatari government, as China and Russia move ever closer amid a flurry of US sanctions.
The little known CEFC China Energy Co will buy a 14.16% stake in Rosneft, the US$9 billion proceeds of which Glencore and Qatar will use to pay down the debt from their initial acquisition less than one year ago, Bloomberg reported, citing a source familiar with the matter.
Tom Luongo writes at Seeking Alpha on how the deal may explain the original transaction, and the implications it has for the strategic relationship between Russia and China amid continued use of sanctions and economic pressure from the US:
What this deal does is further solidify that China and Russia are strategic allies that is growing closer and more meaningful with every attempt to punish them for pursuing what both feel is in their national interest. It also underscores China’s commitment to Qatar. China is a major trading partner with Qatar. And, this deal is an important statement to the Saudis that China is willing to step up to defend a major energy supplier and dictate terms.
At some point, China will stop offering Saudi Arabia dollars for its oil. With every move to secure sources it can pay in Yuan for, the Saudi dollar peg weakens. For Rosneft, this deal is neutral. It is simply the vessel for larger geopolitical moves to be made. For Qatar, it is a net positive as this is an obvious quid pro quo for making the original investment in December. It buys them a few months of resistance to Saudi economic pressure before making a decision on floating its currency.
For China, the deal is a net win because it ensures a larger flow of Russian oil into its oil-trading markets to continue building investor trust and confidence over time. And, that is really the ultimate win for them.