(EnergyAsia, August 21, 2017, Monday) — Russian energy giant Rosneft’s plan to export natural gas to China has been boosted by its recent sale of a 20% stake in a subsidiary firm to Beijing Gas.
The two state-owned firms have pledged to cooperate to develop the enormous oil and gas resources in Russia’s frontier Far East area as well as help China meet its growing demand for cleaner burning natural gas.
With the June completion of the US$1.1 billion transaction involving Verkhnechyonskneftegaz (VCHNG), Rosneft is looking to build a plant to export liquefied natural gas (LNG) to China and neighbouring countries.
For its part, Beijing Gas now has a stake in one of the largest producing fields in Eastern Siberia with developed infrastructure and access to the Eastern Siberia–Pacific Ocean (ESPO) pipeline that exports crude oil to Asia.
According to Rosneft, VCHNG is licensed to develop East Siberia’s Verkhnechonskoye field which has proven reserves of 173 million tons of crude oil and condensate, and 115 billion cubic metres of natural gas. The field is currently producing 170,000 b/d of crude oil.
In a statement, Rosneft CEO Igor Sechin said its partnership with Beijing Gas will “contribute to the creation of a reliable energy bridge between Russia and Asia-Pacific countries.”
Building on its deal with Beijing Gas, Rosneft signed a strategic cooperation agreement with another Chinese firm to scope opportunities for joint projects in oil, gas, petrochemicals and financial products.
The agreement with CEFC Energy Company was signed during Chinese President Xi Jinping’s visit to Moscow in early July, reflecting Russia’s strong relations with Asia’s largest economy.
Both countries share a common distrust of the US as well as a vision to jointly develop their economies, focusing on the vast potential of their shared border region.
In sharp contrast, Russia’s relations with the US have plummeted to the point that bilateral tensions have returned to the Cold War levels of the 1960s and 1970s.
The worsening state of Russia-US relations has crippled Rosneft’s proposed plan to build an LNG plant with US major ExxonMobil announced three years ago. With the project in limbo, Rosneft will focus its resources on building the LNG plant with Beijing Gas.