China’s private enterprise Huaxin Energy invested US$ 9.1 billion in Rosneft to become the third largest shareholder.

On September 8, China Huaxin Energy Co., Ltd., the largest private enterprise in Shanghai, acquired 14.16% of the shares of Rosneft, with an estimated contract value of about 9.1 billion US dollars. Upon completion of the acquisition, Huaxin became the third largest shareholder of Rosneft, second only to the Russian government (holding 50.00000001%) and BP (holding 19.75%).

According to the 8th news of CBN, Ye Jianyi, Chairman of China Huaxin Board of Directors, said, "We are very happy to be the strategic shareholder of the world’s largest listed oil company and to carry out comprehensive strategic cooperation with Rosneft. This cooperation has further consolidated and promoted China Huaxin’s position in the oil and gas field. China Huaxin looks forward to the in-depth cooperation with Rosneft, and will make great efforts to promote the joint cooperation between Rosneft and China market, so as to provide strong support for meeting China’s energy demand. I firmly believe that this transaction will inject new energy into the promotion of Sino-Russian economic and trade cooperation. "

On June 14th, Ye Jianyi, Chairman of China Huaxin Board of Directors, met with Igor Sechin, CEO of Russian oil company. /data map from the network

On the evening of September 8th, Beijing time, Glencore, a global commodity giant headquartered in Barr, Switzerland, announced that a consortium formed by it and Qatar Investment Authority had reached an agreement with CEFC of China, and the former transferred its 14.16% stake in Rosneft to China Huaxin.

According to the announcement, the price for China Huaxin to acquire the equity of Rosneft is 16% higher than the average price of 30 days before September 8. According to the calculation of Rosneft’s total share capital, the 14.16% equity acquired by Huaxin accounts for about 1.502 billion shares, and the average share price before September 8 and 30 is about 5.13 USD. Based on this calculation, Huaxin’s purchase price is about $9.1 billion.

The announcement also shows that the transaction is still subject to regulatory review.

It is reported that this transaction is the largest upstream transaction in the global oil industry since Shell Oil acquired British Gas Group (BG) in 2015. At the same time, it is also the second largest overseas oil and gas acquisition in the history of China’s oil industry, second only to China CNOOC’s acquisition of Nexen Company for US$ 15.1 billion in 2012.

Upon completion of this acquisition, China Huaxin will become the third largest shareholder of Rosneft, second only to the Russian government (holding 50.000000001% through JSC ROSNEFTEGAZ) and BP (holding 19.75%).

Glencore official website Announcement

Rosneft is the largest oil company in Russia and the largest listed company in the global oil and gas industry. Its business covers 35 countries and regions including North America, Brazil, Vietnam, Venezuela and Mozambique, and its oil and gas equivalent output reached 265 million tons in 2016. This means that Huaxin will acquire the oil rights and interests of 42 million tons of oil and gas reserves every year with a total amount of 2.67 billion tons, ranking among the largest oil companies in the world, and will become a new important link between Russian oil and China market.

Earlier, according to the Securities Times reported on the 7th, the day before the official announcement of the acquisition, the market has heard the news that Huaxin shares in Rosneft. At that time, relevant persons of Huaxin Group told the newspaper that the company had held several talks with Rosneft and signed a strategic cooperation contract, and relevant information had been released in official website. However, regarding whether or not to take a stake in Rosneft, it only responded that there is no new information to disclose at present.

According to Huaxin Energy official website and Russian oil company official website, there have been frequent interactions between the two sides in recent months.

On June 14th, Ye Jianyi, Chairman of Huaxin Board of Directors, met with Igor Sechin, CEO of Rosneft in Moscow. The two sides reached broad consensus on mutually beneficial and win-win comprehensive strategic cooperation in the fields of oil and gas resources development, crude oil and refined oil trade and financial services, and agreed to set up a joint working group to promote bilateral cooperation as soon as possible to achieve substantive results and sign relevant cooperation agreements.

On July 4th, Rosneft said that it signed a strategic cooperation agreement with China Huaxin and reached an agreement to consider establishing a vertically integrated joint venture company in Russia to carry out oil and gas projects and establish a joint investment fund.

On August 12th, Igor Sechin led a delegation to visit Huaxin Headquarters in China, and the two sides signed a strategic cooperation framework agreement. The energy and financial teams of the two sides also held further discussions and consultations on the projects involved in the agreement, and determined specific investment projects and plans.

On September 3rd, Rosneft and Huaxin signed a strategic cooperation agreement, which will start oil and gas exploration and development cooperation in Siberia. Xie Qin said, "The signing of this common agreement is a complete demonstration of Russian oil strategy. The primary strategy of Russian oil is to strengthen relations with Asia-Pacific countries, especially China."

In addition, on August 28th this year, Zang Jianjun, executive director of China Huaxin, attended the opening ceremony of the 2017 World Judo Championships in Budapest, Hungary. During this period, Zang Jianjun was received by Russian President and Honorary President of the International Judo Federation Putin. It is reported that Putin is concerned about China Huaxin’s investment cooperation in Russia, and expressed support for China Huaxin.

In addition to active cooperation with Rosneft, China Huaxin is also actively seeking cooperation with another famous Russian enterprise, Russian Basic Elements Group. The Russian Basic Elements Group is the second largest consortium in Russia and one of the largest diversified industrial groups in the country, and its business involves energy, finance, mining and manufacturing. Since the second half of this year, the two companies have conducted many exchanges and reached a consensus on long-term strategic cooperation.

Huaxin has repeatedly shot in the oil and gas field.

Ye Jianyi, Chairman of the Board of Directors of China Huaxin once said, "The vision of China Huaxin is very simple, that is, to obtain overseas resources and serve the national strategy." It is reported that Huaxin Energy is the largest non-state-owned energy company in China, and its revenue in 2015 is close to two-thirds of CNOOC’s.

Ye Jianyi, Chairman of the Board of Directors of China Huaxin/Data Map from the Internet

According to media analysis, unlike most upstarts in China who are competing to "go global", Huaxin always focuses on the oil and gas field.

According to public information, based in Europe, Huaxin has laid out oil and gas terminals, acquired Kazakhstan National Oil International Company, owned a large refinery with the latest equipment in Romania, owned more than 1,000 gas stations and hundreds of oil depot transfer stations in countries around the Mediterranean Sea and the Black Sea, such as France, Spain and Romania, and has formed a large-scale oil and gas terminal integrating refining, processing, storage, transportation and sales in Europe.

In addition, in line with the "Belt and Road Initiative", Huaxin set up its second headquarters in Georgia to integrate upstream oil and gas rights and interests through the establishment of funds and asset securitization, ensure stable oil and gas supply, and continuously expand upstream oil and gas resources rights and interests in Abu Dhabi, Chad, Kazakhstan, Russia and Iran. Layout key oil and gas logistics nodes outside China, build a diversified energy storage and transportation system at home and abroad, establish a swap mechanism for oil reserves in Europe, the Middle East and China, and realize linkage between domestic and international markets.

For example, on February 20th this year, Huaxin signed an agreement with the Abu Dhabi government and Abu Dhabi National Oil Company (ADNOC) to acquire 4% interest in the land concession contract block in Abu Dhabi, with a contract period of 40 years and an investment of US$ 1.8 billion, including an entry fee of US$ 888 million.

According to the China Energy News on September 9th, the enthusiasm of China enterprises in the "Belt and Road" construction continues to rise, and the influence of private enterprises cannot be ignored. According to the big data analysis of the National Information Center, among the top 50 enterprises in China, central enterprises account for 36%, local state-owned enterprises account for 20%, private enterprises account for 42%, and joint ventures account for 2%. Among them, Huaxin is particularly eye-catching because of its rapid development speed and achievements. This year, Huaxin ranked 222nd in the Fortune Global 500 list with an operating income of US$ 43.7 billion, up seven places from last year. This is the fourth consecutive year that the company has been included in the Fortune Global 500 list. What is the order of magnitude of 222 bits? Ranked 216th on the list is China Merchants Bank, and ranked 226th is Lenovo Group.

In fact, in addition to the energy field, the company also quickly obtained a series of "full licenses" for financial business, including banking, securities, insurance, trust and so on. However, Ye Jian, the head of Huaxin, is extremely low-key and mysterious. As Huaxin received more and more attention from the outside world, Ye Jianyi was interviewed by Fortune magazine last year, telling the internal structure, concept and strategy of Huaxin Company. It is reported that Huaxin, with the approval of Shanghai Municipal Committee and Shanghai Social Work Committee, established the CPC Huaxin Party Committee, Discipline Inspection Commission, Trade Union and Youth League Committee, making efforts to create an integrated work pattern of "Party, Discipline, Industry and Youth League", forming an overall joint force and enhancing the internal cohesion of enterprises.