BEIJING/HONG KONG (Reuters) - Privately-run conglomerate CEFC China Energy has obtained preliminary state approval for its proposed $9.1 billion investment in Russian oil major Rosneft (ROSN.MM), three sources with knowledge of the matter told Reuters.
CEFC said earlier this month it will buy a 14.16 percent stake in Rosneft from a consortium of Glencore (GLEN.L) and the Qatar Investment Authority, strengthening energy ties between Moscow and Beijing.
The approval 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, or 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 China Energy has grown in recent years from a niche oil trader into a $25 billion sprawling energy and financial conglomerate with strong political ties and 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, the world’s top energy consumer and crude oil buyer, 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, banking and company source said. CDB, a Chinese policy bank, has long supported CEFC and is its biggest lender.
Reporting by Chen Aizhu; Jiang Yan and Carol Zhong in Hong Kong; Editing by Kim Coghill and Muralikumar Anantharaman