Russia's Rosneft mulling share sale to CNPC

Russia, the world's top oil producer, is reported by Bloomberg to be seeking Indian or Chinese buyers for a 19.5 percent stake of its oil giant, Rosneft, as part of efforts to cover budget deficits and privatize its state-owned sector.

China National Petroleum Corp and India's Oil and Natural Gas Corp have shown interest in the sale, which would fetch at least 700 billion roubles ($10.8 billion; 9.5 billion euros), sources familiar with the matter said. Rosneft, the country's largest oil producer, will remain the controlling shareholder.

Wang Zhongcai, general manager of the overseas oil exploration unit of CNPC, also known as PetroChina, said in April that the company, as a longstanding partner of Rosneft, intends to participate in Russia's privatization plan.

Rosneft declined to comment, while CNPC was not immediately available.

Russia is putting more focus on energy cooperation with Asia, as China and India are expected to consume 4.8 million to 6 million barrels of oil per day respectively by 2040, according to data from the International Energy Agency.

Experts say the privatization will bring benefits to Russia, given the falling oil prices coupled with plummeting Russian rouble. But buyers must carry out substantial analysis, they warn.

"There are still many uncertainties over future oil prices despite a slight rebound, so it is hard to tell whether Russian oil assets are worth that amount of money," says Gao Jian, a senior analyst at commodities consultancy Sublime China Information Co Ltd.

There are also political factors and management risks to be considered while dealing with Russian companies, especially in the state-regulated energy sector, he says.

Rosneft has been aiming to export its oil riches to China. CNPC and Rosneft have set up a joint refinery project in Tianjin, which is under construction and expected to be commissioned by 2019. The refinery project will have a crude oil processing capacity of 16 million metric tons.

Earlier reports said the Russian company has offered CNPC a stake in East Siberian oil producer Taas-Yuryakh with reserves of nearly 1 billion barrels as a part of their broader cooperation in 2013.

Bloomberg contributed to this story.

lvchang@chinadaily.com.cn