Page 40 - bne_Magazine_July_2018

40 I Eastern Europe bne July 2018
Rosneft, the company building at Dubiniskaya street in Moscow. Gennadiy Solovyev / Shutterstock.com
COMMENT:
Russia’s oil giant Rosneft just crossed one of China’s red lines in Vietnam
Nicholas Trickett in London
Russia’s largest oil company, state- owned Rosneft, started drilling at a natural gas field off Vietnam’s coast and crossed one of Beijing’s red lines in the process.
The once close relations between China and Rosneft seem to be cooling. While they have been pulled together to face down the American hegemony, their own interests are not perfectly aligned and frictions are starting to show.
China has made claims on the Vietnam- ese piece of seabed, and the Kremlin backed away from a row by explaining Rosneft had not consulted with it regard- ing the decision to drill. Beijing’s criticism caught the Kremlin off-guard. It had not lodged any criticism earlier when Rosneft launched exploratory drilling at the field, which began in 2016.
China appears to be pushing against Rosneft’s ambitions to develop offshore
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projects not only to secure its own mari- time claims. The move parallels Russian oil companies’ dependence on China as a result of western sanctions on imports of certain technologies meant for offshore oil projects.
The story highlights the costs of Moscow’s turn towards Beijing for political support.
Rosneft and China
Rosneft and its CEO Igor Sechin is Rus- sia’s leading company in its economic diplomacy with China. Closer coop-
That year, Rosneft acquired domestic competitor TNK-BP and its oil assets in Russia’s east for $55bn to surpass Exxon- Mobil and become the world’s largest list- ed oil producer. Rosneft owed $71bn in debt after the deal went through.
China was looking to buy into oilfields in Russia. Rosneft saw an opening and agreed to double oil supplies to China using TNK-BP’s assets. The company received an estimated $60bn prepay- ment for future oil deliveries, cash it used to pay debts.
“The once close relations between China and Rosneft seem to be cooling”
eration between Rosneft and China’s National Petroleum Corporation (CNPC) and Sinopec – China’s largest state energy firms – goes back to 2013.
Rosneft depended on financing from China, but offered few opportunities to invest into Russian oilfields in return.