ST. PETERSBURG, Russia (June 22, 2015) — Russia's Rosneft Oil Co. and China National Chemical Corp. (ChemChina) — both major shareholders in Pirelli & C. S.p.A. — have struck a crude oil supply deal that could lead indirectly to Rosneft's taking an ownership stake in ChemChina of up to 30 percent.
The heart of the deal — good for one year — is a memorandum of understanding (MoU) calling for Rosneft to supply 200,000 metric tons of crude oil to ChemChina, a major petrochemical supplier.
Rosneft said it expects its position to improve “significantly” in the Asia-Pacific region and especially in China through the implementation of the MoU, signed at the recent Saint Petersburg International Economic Forum.
“The cooperation with ChemChina will allow Rosneft to obtain a new potential for the production and marketing of products along the whole value-chain to the end-customer,” Rosneft said.
The company said it expects proceeds from the sale of crude oil to ChemChina to help it fund its possible acquisition of an ownership stake in ChemChina. The MoU also includes provisions for the parties to cooperate in the areas of oil, oil products and petrochemical trading.
Commenting on the signing, Rosneft Chairman and CEO Igor Sechin said the signed MoU “confirms the level of trust with our Chinese partners. We are sure that together we will enhance efficiency of one of the best companies in the region.
“Moreover, (while) the formula of preliminary agreements do not assume the fund raising, on the other hand it lays the basis for uninterrupted deliveries of Rosneft's products to CCPC facilities.”
With annual sales of $39.4 billion in 2013, ChemChina is considered China's largest chemical company and 19th among the world's top 100 chemical corporations.
ChemChina is active in six sectors: new chemical materials; basic chemical materials; oil processing; agrochemicals; rubber products; and chemical equipment, according to ChemChina's website.
The companies are two of the largest shareholders in Italian tire maker Pirelli. The Chinese group is seeking to acquire control of Pirelli, having bought nearly 30 percent of its shares in March.