Rosneft, Russian oil giant, ditches dollar for euros as reference currency

Global oil market intelligence emerging right now is indicating that Rosneft, the largest oil company in Russia, has completed the switch from using the US dollar to euros as reference currency in the pricing of its export contracts.

Reports monitored by businessamlive.com shows Igor Sechin, chief executive officer of Rosneft, as saying on Thursday that the move is aimed at minimizing risks from potential new U.S. sanctions.

Sechin told the Eurasian Economic Forum in Verona, Italy, that his company has already fully switched to euros as the base currency for all its export contracts, and sees big potential in working in euros.

He also said the Chinese yuan could become a much more important global currency in the future, because of Chinese economic growth.

Sechin is quoted as also saying that while the share of the U.S. dollar in the global oil and oil products trade is around 90 percent currently, but noted that in ten years’ time, due to the Chinese economy, the yuan could raise its share from the current 2 to 5 percent.

Maxim Oreshkin, Russia’s economy minister told the Financial Times in an interview earlier this month that the country was looking at ways to settle its energy transactions in euros and/or rubles in order to avoid dealing with dollars.

Reports had emerged at the beginning of this month that Rosneft had set the euro as the default currency for all new exports of crude oil and refined products, as the state-controlled giant looks to switch as many sales as possible from U.S. dollars to euros.

The move started in September when Rosneft sought euros as the default option of payment for its crude oil and products.

The company sells around 2.4 million barrels per day (bpd) of oil and is the biggest oil exporter from Russia, according to Reuters estimates.

Moving away from the dollar was brought was brought about by the belief that the United States has not ruled out imposing sanctions on Rosneft over its involvement in trading oil from Venezuela, according to monitored reports.

According to reports, Rosneft has been reselling the oil from the Latin American country to buyers in China and India and thus helping buyers hesitant to approach Venezuela and its state oil firm PDVSA because of the U.S. sanctions on Caracas, and, at the same time, helping Venezuela to continue selling its oil despite stricter U.S. sanctions.