Rosneft (Moscow) and China National Chemical Corp. (ChemChina; Beijing) on Saturday signed a number of agreements, including the supply by Rosneft of crude oil to ChemChina and Rosneft acquiring a stake in ChemChina’s petrochemical subsidiary. The signing took place at the St. Petersburg International Economic Forum. The crude oil contract covers the supply to China of 200,000 m.t./month over a period of one year. Rosneft and ChemChina have also signed a Memorandum of Understanding (MOU) under which Rosneft plans to acquire a 30% stake in ChemChina Petrochemical Co. (CCPC; Beijing). Rosneft will, under the terms of the MOU, analyze CCPC’s assets and is expected to pay for the acquisition with proceeds from the supplies crude oil to ChemChina. The MOU also covers cooperation in the area of crude oil, oil products and petrochemical trading.
The implementation of the terms of the MOU will allow Rosneft to significantly strengthen its position in the Asia/Pacific region, especially in China. Together with the construction of a refinery in China, which is being implemented by Vostok Petrochemicals joint venture, 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 says. Vostok Petrochemicals, a JV in which China National Petroleum Corp. has 51% and Rosneft 49%, is planning a 16 million m.t./year refinery and petchem complex at Tianjin.
Commenting on the signing, Igor Sechin chairman of Rosneft said, “The signed memorandum 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 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”.
CCCP’s oil refining capacity is 25 million m.t./year. Its petchems activities cover the production of propylene and polypropylene, styrene, acrylic acid and esters, methyl ethyl ketone, alpha olefins and others.