China’s top arms dealer may take over oil stake in UAE from troubled energy oligarch



Stake of the UAE’s biggest crude oil producer may change hands from China’s troubled energy oligarch CEFC to one of the world’s biggest arms dealer, a state-owned defense conglomerate based in Beijing, media has reported.

The change hands will help the Chinese government secure its oil interest in the Middle East.

China Development Bank, CEFC’s main creditor, is putting the Chinese company’s 4 percent stake of Abu Dhabi National Oil Corporation up for “a fire sale”, the South China Morning Post reported, quoting three sources familiar with the plan.

CEFC is being broken up in the Chinese government’s campaign to force aggressive spenders dispose their overseas assets, especially properties, in a bid to rein in loans and protect the country’s financial system.

Compared to Anbang and HNA, both of which have spent lavishly on buying properties overseas, CEFC has obtained more energy assets, which the Chinese government considers as strategic stake.

Two front runners are competing for the stake: the Hengli Group, a privately owned energy company, and China North Industries Group Corporation (Norinco), one of the world’s biggest arms dealers, the people said, declining to be named for disclosing private conversations.

Norinco, a state-owned company based in the Chinese capital, is one of the world’s biggest defence contractors, producing a wide variety of weapons including small arms and submachine guns, tanks, military drones, artillery, anti-missile systems and ballistic missiles.

photo_0025_2018-03-13_DCP11TJD0BGT0025NOSNorinco has been active a player in the defense market of the Middle East in recent years, as countries in that region, north Africa included, tend to buy more Chinese weaponry, which are at better prices compared to western products.

Norinco’s general manager was in Abu Dhabi in late April, where he was received by the emirate’s Crown Prince Mohammed bin Zayed bin Sultan al-Nahyan in a meeting to discuss military cooperation, according to an announcement on Norinco’s website.

In February, the company received an order from a Middle East customer to delivery new ‘sniper’ grenade launchers, according to Defense Blog.

The LG5 is an export variant of the QLU-11 automatic grenade launcher which is currently in service with the Chinese Marine Corps and developed by Norinco.


The fire sale at CEFC kicked off in earnest after its chairman and founder Ye Jianming was taken away in mid-February by Chinese authorities to help with investigations into the circumstances that led to his company’s explosive, debt-fuelled growth into China’s largest privately owned energy conglomerate.

Ye has not been charged with any crime, and cannot be reached for comment. Soon after he disappeared from public view, Chinese banks began pulling their credit lines and his CEFC empire began unravelling.

CEFC bought 4 percent of Abu Dhabi’s state oil producer in February 2017 for $888 million, and pledged $1.8 billion of spending in the venture.

That would be the Chinese company’s most valuable offshore energy asset until its $9 billion plan last year to buy 14 percent of Rosneft, which had to be abandoned and offloaded to Qatar’s sovereign wealth fund after Ye’s fall from grace.


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