Free Chinese Lesson - CNPC to spend 6b USD on Russian crude oil

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CNPC to spend 6b USD on Russian crude oil

www.chinanews.cn 2005-01-31 17:48:23

Chinanews, Jan. 31 - Rosneft, the seventh largest oil company in Russia,
will provide oil for China from February 1, 2005 according to the
agreement with the China National Petroleum Corporation (CNPC). Total
volume of this contract is six billion US dollars and 48.4 million tons
of crude oil in five years.
This loan amount exceeded the total overseas loan amount of all Russian
banks in 2004. The volume of crude oil is equivalent to the output of the
Daqing Oilfield, China's biggest oilfield, in 2003.
Based on the latest USD lending rate of 6.06%, the principal and interest
for the six billion US dollars will total about 8.1 billion US dollars in
six years. In this transaction, the price was about 22 dollars per
barrel, which was quite low.
Huge capital input from China's petroleum companies has been an important
means for Russia to break the blockades by western banks and
re-capitalize the Yukos Oil as a state-owned company.
The loan provided by the CNPC will help the Russian state-owned Rosneft
company to acquire the main production departments of the Russian oil
giant Yukos. On Dec 19, 2004, this company, with the help from the Baikal
Finance Group, won the bid for almost 77% shares of the Yukos' subsidiary
company Yu-ganskneftegaz at a low price of 9.4 billion US dollars.
PetroChina (0857.HK) signed off this agreement with the parent company
name to protect itself from shareholders responsibilities. It is believed
that this USD-for-oil program would get the blessing from China's
state-owned banks.

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