A $270bn Russia-China oil deal may shape global oil flows in years to come according to forecasts.
Russia’s state-owned Rosneft has agreed to double the amount of oil it exports to China, from 300,000 barrels-per-day (bpd) to 600,000bpd in the second half of the decade in exchange for an up-front cash lump sum. Total shipments could increase to as much as 900,000 bpd by 2020.
Indicating the way forward? Image:Rosneft
Talks to finalise the deal had been ongoing since February this year, when industry sources claimed the Russian major was looking for between $25-$35bn. The size of the upfront payment has now more than doubled to around $60-70bn.
The Sino-Russian tie up is one of the largest deals ever in the oil industry and may change the way future of both global oil flows and commodities pricing, according to energy observers.
As American imports decline and over-saturated, crisis stricken European countries struggle to find growth, Russia is looking for expansion into the Asia-Pacific region. Equally, China is looking to diversify its sources of oil from potentially unstable areas, like the Middle East and Africa.
Energy analyst Marin Katusa claims the buyback of TNK-BP is a “Saudi Aramco-ing” of Russia’s natural resources. Morever, by consolidating its resources, Russia may have a tighter hold on global oil prices in the future.