Speculation swirls CEFC China, the energy giant that came from nowhere

CEFC China Energy Co’s rapid ascent was shrouded in mystery and the turmoil that’s engulfed the company over the past week is no different. Just six months ago, CEFC called itself China’s largest private oil and gas company, with 50,000 employees and revenue of more than $40 billion. That’s when it agreed to buy a $9 billion stake in Russian state energy giant Rosneft following a series of deals elsewhere — a spree that spawned speculation over how the previously obscure firm managed to make its mark on the international stage so quickly. Now, it’s being hit by a slew of bad news.

Chairman Ye Jianming is said to have been investigated by authorities, it’s reported to have been taken over by an arm of the Shanghai government and the company’s bonds have posted record declines. All that’s raised questions about the status of the Rosneft deal, which is yet to close. CEFC is also said to have missed paying $63 million for an oil-trading joint venture. “The rise of the company was astonishing and difficult to understand,” said Li Li, a research director with commodities researcher ICIS China. “Now, many people in the industry are questioning not only its capability to finalise the Rosneft deal but to sustain normal operations.” While a CEFC spokesman said last week that the company is operating normally and reiterated that reports about Ye being investigated are unfounded, Chinese President Xi Jinping’s crackdown on debt-fuelled expansion and scrutiny of the nation’s rising tycoons is fuelling speculation that the firm is being reined in. CEFC had holdings that spanned the Middle East to Africa and Europe, including everything from oil ventures to a soccer team and even a brewery.