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Russia’s Rosneft, BP ink deal on long-term oil supplies

June 27, 2014, 10:03 UTC+3 KHABAROVSK
Terms of the deal envisage export supplies of oil products, with possible substitution for oil totalling up to 12 million tons, within five years on terms of prepayment that will make no less than $1.5 billion
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Rosneft CEO Igor Sechin

Rosneft CEO Igor Sechin

© ITAR-TASS/Alexei Nikolsky

KHABAROVSK, June 27. /ITAR-TASS/. Russian oil major Rosneft and British Petroleum Oil International Ltd have signed a package of agreements on long-term supplies of oil and oil products on terms of advance payment in the Russian Far Eastern city of Khabarovsk on Friday.

Terms of the deal envisage export supplies of oil products, with possible substitution for oil totalling up to 12 million tons, within five years on terms of prepayment that will make no less than $1.5 billion.

Several leading world financial institutions participated in the organization of advance payment.

“At the moment of signing, the deal prepayment has made around $2 billion. Eight leading world banks participated in the deal. The sum of prepayment will be increased, because several more banks said they are interested in the deal,” a representative of the Russian oil giant said.

The price will be calculated according to a formula similar to that the company uses in the sale of oil products and oil at regular annual tenders. Deliveries on the contract may begin in July.

The term of effect of the agreements meets Rosneft’s interests in concluding long-term deals with major consumers and allows making long-term planning of supplies effectively.

Rosneft enhances and builds up mutually beneficial cooperation with British Petroleum (BP). This deal opens up new possibilities for both companies, as BP ensures stable supplies and guarantees quality of oil products, whereas Rosneft keeps up high profitability of its sale and, according to reference structure of such deals, gains additional financial resources,” Rosneft President Igor Sechin stated.

 

Rosneft and BP agreement

Russian oil major Rosneft and BP Oil International have signed an agreement on Friday, implying that Rosneft will supply 12 million tonnes of oil products to BP within the next five years.

The supplies may start in July 2014.

Under the contract, BP must make an advanced payment standing at least at $1.5 billion. “The pre-payment amounted to about $2 billion at the moment of the agreement signing. Eight leading world banks took part in the deal. The pre-payment will rise because several other banks were interested in the deal as well,” a Rosneft representative said.

Oil products may be replaced for crude on demand under the agreement.

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