Rosneft Prepayments From China Risk Drying Up as Crude Slumps
- CNPC supply contract valued at $270 billion when oil at $100
- Advances to Rosneft may already exceed entitlement under deal
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Rosneft OJSC’s 25-year deal to supply oil to China National Petroleum Corp. has yielded billions of dollars of advance payments for the world’s largest traded producer. That funding risks drying up as the crude price slumps, according to Sberbank CIB.
Prepayment contracts, where producers get cash up front in return for a promise to repay with physical oil in the future, provide the Russian state-controlled company with alternative financing while guaranteeing flows of often discounted crude to customers.