“Rosneft” and Chinese Corporation “Huaxin” (CEFC) has signed a strategic cooperation agreement, has informed “Rosneft”. The document was signed during the official visit of the Chairman of the people’s Republic of China XI Jinping to Moscow from the Russian company has put his signature to the chief of staff Yury kurilin, with the Chinese President: “Huaxin” Chen Tutu. “Huaxin” received “option for acquisition of a stake in the retail business of “Rosneft”, said the Russian company. Details are not specified.
“Huaxin” — a major private Finance-energy company that offers banking, stock exchange and other financial instruments and is a major player in the global market of investments in such areas as new energy, Biopharmaceuticals, aviation, tourism.
The Chinese leader’s visit to Russia: major contracts
Rosneft is the largest network of filling stations in Russia: at the end of 2016, the company owned 2962 refills in 66 regions of Russia, Abkhazia, Belarus and Kyrgyzstan. Rosneft does not disclose separately financial performance of the retail segment, indicating only General information about logistics, processing and Commerce. EBITDA of this segment in the first quarter of 2017 fell by 25.9% to RUB 20 billion, compared with the first quarter last year, according to the explanation of the statements of the company. All retail business of “Rosneft” could be worth $2 billion to 4 billion, says the portfolio Manager of the GL Asset Management Sergey Vakhrameev.
In this case, “Rosneft” plans to move to a holding management structure, highlighting the holdings of the various segments of the business, announced June 22 at the annual meeting of shareholders chief Executive officer Igor Sechin. The first pilot, the holding will be created in the retail segment, he said. Rosneft hopes to attract retail strategic partner who can develop at the gas station additional services, analysts said the “Opening Capital” in the review following the meeting with top managers of the company.
This is necessary to attract investors in different segments of the business, said RBC a source in “Rosneft”. So far the company has attracted investors mainly in mining projects, and a holding structure will allow you to search for partners in various areas, he said.
According to “Interfax”, the deal with retail business of “Rosneft” can be completed in 2018. But even after it “Rosneft” intends to remain an anchor supplier of fuel in its petrol stations network, earning wholesale margins on long-term contracts, and receive income in the form of dividends on the remaining shares, pointed out the Agency interlocutor.
In the past six months, margins of the retail segment is low due to high stock prices, says the General Director of Agency “analysis of commodity markets” Michael Turukalov. In this case, “Rosneft” and other oil companies can affect stock price, he adds. Right now the margin is formed in a large wholesale at the stage of sale of petroleum products from refineries, adds Turukalov.
The profitability of the retail business, “Rosneft” and the national average is now low — about 5%, for comparison: the profitability of mining projects is around 15%, says Vakhrameev GL Asset Management. From the beginning of 2017, increased the excise tax on fuel, and retail prices remain relatively stable, he explains. Selling prices are under the scrutiny of the FAS that puts pressure on the profitability of the refinery and gas networks, agrees the analyst of “Opening the Capital” Artem Konchin.
China is primarily interested in stable oil supplies from Russia, it is difficult to imagine that the company might be interested in marketing of petroleum products in Russia as a business, says Vakhrameev. If the deal goes through, the Chinese company it will be more a political move aimed at further strengthening relations with Rosneft and Russia, the expert concludes.
“Rosneft” and “Huaxin” also agreed to the possible establishment of a joint venture in Russia. It will be a vertically integrated company (usually works in exploration, refining and distribution), indicated by “Rosneft”. Partners can also create a joint investment Fund.
Another partner of the Chinese
A cooperation agreement with the Chinese “Huaxin” was also signed by the group “Basic element” Oleg Deripaska. The two companies have agreed a “long-term mutually beneficial cooperation in industrial production, Finance, logistics, basic infrastructure and other areas”. The representative of “Basic element” has not responded to further questions RBC.