A Chinese conglomerate is buying a 14 percent stake in Russian state oil giant Rosneft for $9.1 billion in a deal that furthers Russian President Vladmir Putin's stated goal of shifting energy sales away from the West and toward Beijing.
The purchase of Rosneft shares by CEFC China Energy from the Western investment firm Glencore announced on September 8 came after the United States imposed a new round of economic sanctions on Russia that makes it difficult for Western firms to maintain and increase ties with sanctioned Russian companies like Rosneft.
Glencore said that it sold most of its Rosneft shares to CEFC at a premium price, and the Chinese company said it paid $9.1 billion for the purchase, making it one of the largest Chinese investments ever made in Russia.
The Kremlin has sought to expand its economic ties with China since the United States and European Union in 2014 imposed economic sanctions in retaliation for its aggression in Ukraine.
Russia is currently the world's top oil producer while China is the world's second largest energy consumer after the United States.
As a result of a series of oil deals, Russia now tops the list of China's oil suppliers, surpassing even its biggest rival Saudi Arabia in the Chinese market, according to the International Energy Agency.
Glencore and its partner in an investment consortium Qatar Investment Authority bought their 19.5 percent stake in Rosneft in December 2016. The surprise deal was part of Russia's drive last year to partially privatize state-owned companies.
The purchase was made at a time when markets expected an easing of relations between Moscow and Washington after the election of U.S. President Donald Trump, who had promised to improve ties with Moscow.
But this summer, the U.S. Congress passed tougher than ever sanctions against Moscow in the wake of allegations that Russia had interfered in the presidential election, and Trump reluctantly signed them into law.
Rosneft is run by Chief Executive Igor Sechin, a close ally of Putin.
On September 8, Sechin told reporters in Moscow that CEFC would get access to Rosneft's oil fields and petrochemical projects in East Siberia and that would provide synergies for the two companies.
The deal is China's second largest energy acquisition after the $15.1 billion purchase of Canada's Nexen by Chinese state oil company CNOOC in 2013.
Earlier this decade, Beijing also loaned $25 billion to Russia to help it build a pipeline into China from Siberia.