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June 25, 2009 3:43 PM

Baker Botts Advises Rosneft on $15 Billion Chinese Loan-for-Oil Deal

Posted by Brian Baxter

It hasn't exactly been a state secret the past few years that China is hungry for oil.

Earlier this week we reported that Vinson & Elkins and three Canadian firms advised state-owned Chinese oil company Sinopec Group on its $7.2 billion acquisition of oil fields in West Africa and Iraq's Kurdistan. It's the largest cross-border M&A deal ever by a Chinese company.

Earlier this year Russian oil giant Rosneft secured $15 billion in loans under an agreement with the Chinese government. The deal was approved by Rosneft's shareholders on Monday.

Steven Wardlaw, partner-in-charge of Baker Botts' Moscow office, led a team from the firm advising Rosneft on the agreement. Wardlaw has an array of Russian energy deals under his belt and Baker Botts previously advised Rosneft on a joint venture with the China National Petroleum Corporation to build a refinery and 300 gas stations in China.

In February two Russian companies--Rosneft and oil pipeline operator Transneft--signed a $25 billion deal with China to supply the country with 20 years of oil.

The Beijing-based China Development Bank is funding the loan, $15 billion of which will go to Rosneft and $10 billion to Transneft for pipeline construction. Rosneft has already received the first tranches of the loan and oil is expected to flow to China's National United Oil Company through Siberian pipelines by early 2011.

Transneft has drawn down on roughly half of its portion of the loan.

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