Rosneft in huge oil deal with China

Russia’s Rosneft agreed a $270bn (£175bn) deal to double oil supplies to China yesterday, as the Kremlin energy champion shifts its focus to Asia from saturated and crisis-hit European markets.

The deal, one of the biggest ever in the history of the global oil industry, will bring Rosneft $60-70bn in upfront pre-payment from China, the holders of the world’s largest foreign exchange reserves.

It will also allow Rosneft, the world’s biggest publicly listed oil firm, to steeply cut its heavy debts and develop new remote Arctic fields.

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“The estimate of the sum of the contract in today’s market prices is absolutely unprecedented – $270bn,” Russian President Vladimir Putin told an economic forum in Russia’s St Petersburg after the deal was agreed.

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.

Rosneft’s boss Igor Sechin, a close ally of Putin, said his firm will supply China with 300,000 barrels per day over 25 years starting in the second half of the decade, on top of the 300,000 bpd it already ships to the world’s number two oil consumer.