(Adds analyst comment, background)
MOSCOW Feb 18 Russian firms Rosneft (ROSN.MM)
and Transneft have secured interest rates of 5.0-5.5 percent on
their combined $25 billion loan from China secured by 20 years
of oil supplies, a Russian government source said on Wednesday.
The two sides estimated the value of the deal at $160
billion, based on a long-term oil price forecast, the high-level
government source, who spoke on condition of anonymity, told
"This is an unprecedented success. The rate is pegged to
LIBOR and the interest rate will fluctuate between 5.0 and 5.5
percent," he said.
China agreed on Tuesday to lend the money in exchange for
the supply of 15 million tonnes of Russian oil over 20 years in
the largest ever deal between the two states, which are seeking
to cement energy ties. [ID:nLH444229]
State-controlled Rosneft, Russia's largest oil producer,
will get $15 billion of the loan from China Development Bank and
oil pipeline monopoly Transneft $10 billion.
Supplies of 15 million tonnes over 20 years translates into
300 million tonnes, which means the two sides are forecasting an
oil price average of $72.76 per barrel, compared with the
current price of $39 per barrel of Russia's main crude Urals
"Five-and-a-half percent is pretty good for a facility with
such a long duration and for such a vast amount of money," said
Alex Fak, an analyst at Troika Dialog brokerage.
"But there's still a question mark over the exact price at
which Rosneft will be selling crude."
China has abundant cash that Moscow needs to access as it
heads into its first recession in a decade. Some Russian firms
are finding it difficult to repay loans and to borrow project
finance on commercial markets.
Russia, the world's second-largest oil exporter after Saudi
Arabia, is seeking to diversify its exports away from the West
and is targeting China as the main market for oil that will be
extracted from the new generation of fields in East Siberia.
China, which is the world's No. 2 oil importer, has been
working hard to win oil supplies from Africa and elsewhere to
run its industries. The Russian deal should allow it to meet 4
percent of its current oil needs.
The agreement, originally planned for the end of 2008, did
not come easily despite being blessed high up in government.
Talks stalled in November over disagreements about interest
rates and state guarantees China sought from the Russian
(Reporting by Moscow bureau, writing by Robin Paxton and Dmitry
Zhdannikov, editing by James Jukwey and Sue Thomas)