A shared stake in the future
Editor’s note:
Energy cooperation has been one of the pillars in Sino- Russian cooperation. Global Times reporter Chu Daye ( GT) talked to Mikhail Leontyev, press secretary of Russia’s Rosneft, the world’s top listed oil producer, to get a deeper understanding of some of the company’s latest business moves. From 2005 to 2016, Rosneft delivered more than 186 million tons of oil worth over $ 95 billion to China and is reportedly eyeing a nascent Chinese gas market.
GT: What are some of the highlights in Rosneft’s cooperation with Chinese energy firms in 2017?
Leontyev: Rosneft’s integrated cooperation in the energy area with Chinese partners is of a strategic nature and covers all business domains – from upstream to refining and petrochemicals production.
In December 2016, Rosneft and China National Petroleum Corporation signed an amendment to an existing agreement envisaging additional supplies via Kazakhstan and the prolongation of the contract signed in 2013, bringing the total volume of the supplies to 91 million tons within a 10- year time frame.
Rosneft and China Energy Company Limited ( CEFC) signed a strategic cooperation agreement during Chinese President Xi Jinping’s state visit to Russia this week. The agreement envisages cooperation of the two companies in such areas as exploration, production, oil re fining and retail business. It also provides an option for the CEFC to purchase a stake in Rosneft’s retail business.
GT: Can you share more of Rosneft’s gas ambitions in the Chinese market? Leontyev: Rosneft and Beijing Gas Group Company Limited closed a deal for the sale and purchase of a 20 percent stake in Verkhnechonskneftegaz, a Rosneft subsidiary, during Chinese President Xi Jinping’s state visit to Russia. The price of the purchased stake is around $ 1.1 billion. As a result of the transaction, the parties are going to create a vertically integrated system of cooperation.
Beijing Gas acquired a stake in one of the largest producing fields in Eastern Siberia with developed infrastructure and access to the ESPO pipeline while Rosneft gets an opportunity to enter China’s prospective domestic gas market, including end users via gas swap deals.
Taking into consideration the decision of the Chinese authorities to transfer Beijing’s electric power from coal to gas, the deal opens up broad prospects for Rosneft’s gas business in the Chinese market.
Also, Rosneft and Beijing Gas are considering options for the development of integrated cooperation in Eastern Siberia and the Far East region.