(EnergyAsia, October 22 2013, Tuesday) — Heavily-indebted Russian oil and gas giant Rosneft has agreed to form a 51/49 joint venture with cash-rich China National Petroleum Corp to develop its reserves in eastern Siberia as part of a long-term plan to expand energy ties between the two countries.
The two companies will develop the “world-class” Srednebotuobinsk field as their foundation project as it is located close to the East Siberia Pacific Ocean pipeline which started exporting Russian crude oil to Asian markets in January 2010. They will also look into building a refinery and a network of retail stations in China.
Rosneft President and chairman Igor Sechin and CNPC chairman Zhou Jiping signed the agreement for the upstream projects last week in the presence of China’s first vice premier, Zhang Gaoli.
According to Rosneft, which began producing oil at Srednebotuobinsk this month, the field holds reserves of over 134 million tonnes of crude and condensate reserves and over 155 billion cubic metres (bcm) of natural gas. The field’s annual production is expected to rise to one million tonnes of oil next year and five million from 2017.
Weighed down by US$57 billion in debt, Rosneft, which has also tied up with Sinopec to jointly produce Urals crude oil, is tapping China for loans to expand its Siberian operations with an eye to raising exports to Asia. Russia’s largest oil producing company is exporting 300,000 b/d of crude oil to China through an ESPO tributary line, and has announced plans to double that volume.
Rosneft said it has fully acquired Taas-Yuriakh Neftegazodobycha, the company that held the licence to develop the Central and Kurungsk blocks of the Srednebotuobinsk field now linked by a tributary pipeline to the main ESPO line.
“The memorandum is another step in developing the strategic partnership between Rosneft and CNPC in various areas of cooperation. Our balanced strategic position will enable us to jointly develop and produce hydrocarbons, execute long-term supplies, jointly construct refining capacity and manage various assets,” said Mr Sechin.
“The development of East Siberia’s resource base will create additional opportunities for supplies to current and future refineries of Rosneft, including Komsomolsk refinery, Far East Petrochemical Company and Tianjin refinery, which will help meet growing demand for petroleum products in East Siberia and the Far East, as well as increase exports to China and the Asia-Pacific region.
“The agreements prove that Rosneft has a sufficient resource base to meet its strategic goals. The participation of our long-term partner in exploration and production activities will help speed up the launch of production at Taas and will facilitate the expansion of cooperation with CNPC in other areas.”