BOFIT Viikkokatsaus / BOFIT Weekly Review 2017/37

The deal is valued at around 7.5 billion euros. The Russian state retains its majority position in Rosneft even if the deal materialises, as CEFC buys the stake from a joint venture of the Qatar Investment Authority and Glencore. The deal with CEFC surprised many as the joint venture bought a 19.5 % stake in Rosneft from the Russian state just last December for 10.2 billion euros. Some observers regarded the motivations for the original deal and its financing arrangements as unclear.

CEFC is reportedly a private company focusing on oil trading and finance. It has no record of investment in Russia. The Chinese energy firm Sinopec owns a stake in Rosneft subsidiary Udmurtneft. CNPC also acquired a few per cent stake in Rosneft last decade, but negotiations to increase the stake have not progressed. If approved, the CEFC deal will be the biggest Chinese investment in Russia so far. Over the past decade, China has become Russia's largest export market of crude oil and Russia is China's largest foreign oil supplier.

Problems surrounding Rosneft's acquisition of a majority stake from the state last autumn in the Bashneft oil company have also received attention recently. Alexei Ulyukayev, who served as economy minister at the time of the deal, is currently on trial for demanding related bribes from Rosneft CEO Igor Sechin. Multibusiness corporation Sistema, which owned the majority of Bashneft before the state seized it, was recently ordered by the court to pay Rosneft 136 billion rubles (2 billion euros) for stripping assets from Bashneft.

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