UPDATE 1-Rosneft says China starts prepayments for oil deals

Wed Jan 15, 2014 9:22am EST

Related Topics

* Aims to more than double oil supplies to China from 300,000 bpd

* Rosneft borrowed $31 bln from banks to buy TNK-BP (Adds details, source)

MOSCOW Jan 15 (Reuters) - Top Russian oil producer Rosneft said on Wednesday it had received the first prepayment tranches from China National Petroleum Corporation (CNPC) for new oil supply deals agreed last year.

Rosneft has signed a raft of deals with Beijing in order to boost its supplies to the booming Chinese economy and diversify away from Europe which, in turn, is trying to wean itself off of its dependence on Russian oil.

Rosneft declined to reveal the exact amount it had received from the deals, which would more than double Russian oil supplies to China from the current level to more than 300,000 barrels per day.

An industry source told Reuters that Rosneft received a first instalment of up to $12 billion late last year.

The payments would help Kremlin-controlled Rosneft decrease its debt burden incurred partly to facilitate a $55 billion deal to acquire Anglo-Russian TNK-BP oil producer last year.

Russian President Vladimir Putin said previously the prepayment would total $70 billion for 360 million tonnes (2.6 billion barrels) of oil for China over the next 25 years.

Rosneft faces loan repayments in 2014 and 2015 of $15.9 billon and $16.2 billion, respectively, after Rosneft head Igor Sechin, a longstanding Putin ally, borrowed $31 billion from international banks to facilitate the TNK-BP deal.

As part of the deal, BP, received a nearly 20 percent stake in Rosneft.

Rosneft has also agreed to supply China's Sinopec with up to 10 million tonnes of oil per year over the next 10 years.

An upsurge in eastbound energy supplies from Russia has worried some traders and European governments, which rely heavily on oil and gas from Moscow.

Last year, flows of Russian oil to non-European markets rose by almost a fifth to 740,000 bpd. (Reporting by Vladimir Soldatkin; editing by Thomas Grove and Jason Neely)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.