Russia targets strategic Chinese energy market
According to the agreement seen by TASS, Rosneft will supply CEFC with 60.8 million tons of oil annually until 2023. The price of the oil would be pegged to the global crude market.
The agreement covers the development of exploration and production projects in Siberia. The two companies plan to cooperate in refining, petrochemicals and crude trading.
CEFC expects to receive up to ten million tons of ESPO (Eastern Siberia-Pacific Ocean pipeline) crude from Russia’s Far East next year; an unknown source told Reuters, adding the rest would be Urals grade and a smaller amount of Sokol crude. Two months ago CEFC agreed to buy a 14.16 percent stake in Rosneft for $9.1 billion.
According to the Russian producer, the deal will increase direct supplies of crude oil to the “strategic Chinese market and ensure a guaranteed cost-efficient export channel for the company's crude sales.”
Russian exports to China have more than doubled over the past six years, up by more than 550,000 barrels a day. The country began supplying China with crude using the Skovorodino-Mohe branch of the ESPO pipeline in 2011. That followed agreements between Rosneft, Transneft, and China National Petroleum Corporation’s (CNPC).
Russia overtakes Saudi Arabia as China’s top oil supplier https://t.co/EL8HTBVBiU— RT (@RT_com) June 29, 2016
In 2014, Rosneft and CNPC inked a 25-year oil deal worth $270 billion under which the Russian company is expected to supply 360.3 million tons of crude to China.