Internationalization:

Country

China

Year of entry

2005

Industry/ business area

Crude oil delivery

Entry mode

Export

China is the biggest importer of Rosneft oil. Deliveries by the Company to that country in 2010 were 9.5 mln tonnes (69.3 mln barrels), as prescribed by agreements dating from 2005. Crude oil was transported mainly by railway. New long-term agreements were reached in 2009 on annual delivery to China of 15 mln tones (110 mln barrels) of oil per year in the period from 2011 to 2030. For purposes of these deliveries a pipeline was completed in November 2010 from Skovorodino in Russia to Daqing in China. Use of the pipeline for agreed oil deliveries began in January 2011.

Motives

High demand and immense growth of economy:

The Organization of Petroleum Exporting Countries, in its February reports, said it expected China would need more oil in 2013 as its economy recovers from a 2012 slowdown. OPEC expects Chinese gross domestic product to grow more than 8 percent for 2013.

Geographic aspects – easy transportation of oil

Firm specific advantages used on the foreign market

Company’s own transportation net

Good relations to Chinese government

First mover or follower

Follower

Type of state involvement in the process of internationalization

The Executive Chairman of the company, Igor Sechin, is considered a close ally of Vladimir Putin and until 21 May 2012, he served as Deputy Prime Minister of Russia in Putin’s cabinet. In December 2012 he had a meeting with Chinese vice premier Wang Qishan about Rosneft’s cooperation with its Chinese partners, as well as attractive projects for the future.  China is planning to provide a number of preferences on the government level, including the right to import crude independently, export products independently and sell petroleum products on the Chinese market, as well as other benefits.

Evaluation of the success of the internationalization

The entry in Chinese market was definitely highly successful. The oil exports are increasing and there are several projects in process of planning concerning an even more intense cooperation.