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September 28, 2017

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Home » Business » Energy

CEFC gets state nod for Rosneft stake

PRIVATELY run conglomerate CEFC China Energy has obtained preliminary state approval for its proposed US$9.1 billion investment in Russian oil major Rosneft, three sources said.

CEFC said earlier this month that it will buy a 14.16 percent stake in Rosneft from a consortium of Glencore and the Qatar Investment Authority, strengthening energy ties between China and Russia.

The nod was received just about a week after the deal was announced, the sources said.

“It’s a preliminary approval from the NDRC which means the government gave the in-principle go-ahead for the deal,” said an industry executive with direct knowledge of the government decision.

NDRC, or the National Development and Reform Commission, is China’s top economic planner.

“The preliminary approval means the government sees the strategic significance of this deal and shall lend its backing in financing.”

The government, including the State Council, China’s Cabinet, is expected to give final approval unless there are “material errors” during the process of proceeding with this transaction, said the executive and a second source briefed by CEFC on the matter.

Both NDRC and CEFC did not immediately comment.

CEFC has grown in recent years from a niche oil trader into a US$25 billion sprawling energy and financial conglomerate with a rare contract to store part of China’s state oil reserve.

CEFC has long held overseas expansion ambitions and grabbed the spotlight in the Rosneft deal at a time when larger state-run peers like Sinopec Group have shifted gears from rapid expansion to divestment.

A stake in Rosneft will allow China to boost cooperation with the world’s top oil producer.

CEFC has tapped China Development Bank and Russian lender VTB to help fund the Rosneft deal, a banking and company source said.

CDB, a Chinese policy bank, has long supported CEFC and is its biggest lender.


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