BEIJING – CEFC China Energy’s $9.1 billion purchase of a stake in Russia’s Rosneft Oil ROSM.NN was mainly driven by China’s Belt and Road Initiative and has strong support from the government, Ye Jianming, the company’s founder said.
Ye posted his thoughts on Monday in a message to CEFC employees on the company’s Wechat account to explain how the privately-owned company secured the deal with Rosneft instead of China’s state-owned oil majors. Wechat is China’s largest social media application mainly used as a messaging tool.
The Rosneft purchase is the culmination of CEFC’s growth from a niche oil trader started in Ye’s hometown in the southeastern Chinese province of Fujian to an energy and financial conglomerate. The company produces oil in West Africa and Abu Dhabi, owns hundreds of fuel stations in Europe, and is planning to buy a stake in a Cezch-Slovak bank.
CEFC’s investment was 70 percent driven by Beijing’s Belt and Road Initiative as Russia and Central Asia are considered top-priority sources for China, the world’s top energy consumer, to secure its oil and gas needs, he said.
“We prepared ourselves earlier and positioned ourselves better…It’s not because we are more powerful than the three big oil firms…it’s because the Russian side wants a private sector partner,” Ye said, referring to China’s state oil firms China National Petroleum Corp, Sinopec Group and China National Offshore Oil Co.
CEFC won preliminary state approval for its 14.16 percent stake in Rosneft about a week after the deal was announced.
Rosneft decided to tie up with CEFC as a way to break western economic sanctions imposed on Russia at the same time the country’s economy has experienced difficulties since the 2014 oil price drop, said Ye.
“This is the most difficult times for Russia…the price for the stake was also hugely reasonable, a price that was unimaginable three years ago,” Ye said.
A key area for the alliance with Rosneft will be natural gas, a cleaner fuel for power generation, said Ye, adding that CEFC will step up natural gas investments in Qatar and Africa.
Additionally, even though oil will be replaced by electricity to power cars in the future, the fossil fuel remains essential as a feedstock for producing the petrochemicals that China needs, he said. – Reuters