November 16, 2017 / 11:22 AM / 2 years ago

Rosneft board approves oil deal with China's CEFC: source

A worker is seen at the central processing facility of the Rosneft-owned Priobskoye oil field outside the West Siberian city of Nefteyugansk, Russia, August 4, 2016. Picture taken August 4, 2016. REUTERS/Sergei Karpukhin

BEIJING (Reuters) - Russia’s Rosneft has approved a 2018 deal to supply CEFC China Energy about 12 million tonnes of crude oil as part of the Chinese firm’s $9.1 billion investment in the Russian oil major, a Chinese source with direct knowledge of the matter said on Thursday.

Of the total supply, CEFC expects to receive 8 to 10 million tonnes of ESPO crude from Russia’s Far East, said the source, in a deal that will make the Chinese firm a dominant player in the ESPO crude market and may enable it to challenge dominant Western oil traders like Vitol and Trafigura.

The source, who declined to be named due to not being authorized to speak to media, said the rest of the supply will be Urals grade and a smaller amount of Sokol crude.

“CEFC received informal notification today that the supply agreement has been approved by Rosneft’s board of directors,” said the source.

CEFC will start receiving oil from January, with volumes estimated at around 2 million tonnes for the first quarter, with volumes set to rise from April to 4 million tonnes each quarter.

A CEFC spokesman couldn’t immediately comment. Rosneft has not replied to Reuters’ written request for comments.

Reporting by Chen Aizhu; Additional reporting by Vladimir Soldatkin and Olga Yagova in Moscow; Editing by Josephine Mason and Hugh Lawson

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