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Rosneft and Transneft To Pay 5 % Interest for China Loan

Russian oil companies will pay interest rates of 5 percent to 5.5 percent on their combined $25 billion loan from China secured by 20 years of oil supplies

The two sides estimated the value of the deal at $160 billion, based on a long-term oil price forecast, said the high-level government source, who spoke on condition of anonymity.

China agreed Tuesday to lend the money in exchange for the supply of 15 million tons of Russian oil over 20 years in the largest-ever deal between the two states, which are seeking to cement energy ties.

State-controlled Rosneft, the country's largest oil producer, will get $15 billion of the loan from China Development Bank and oil pipeline monopoly Transneft will receive $10 billion.

Supplies of 15 million tons over 20 years translates into 300 million tons, which means that the two sides are forecasting an average oil price of $72.76 per barrel, compared with the current price of $39 per barrel of Russia's main crude blend, Urals.

China, which is the world's No. 2 oil importer, has been working hard to win oil supplies from Africa and elsewhere to run its industries. The Russian deal should allow it to meet 4 percent of its current oil needs.

Source: The Moscow Times

Author: Ksenia Kochneva