(EnergyAsia, June 27 2013, Thursday) — China’s largest oil and gas producing company has agreed to acquire a 20% stake in Russia’s US$20-billion Yamal liquefied natural gas (LNG) project for an undisclosed sum.

China National Petroleum Corp (CNPC) will join France’s Total as equal minority owners with operator Novatek, Russia’s second-biggest natural gas producer, still holding a majority stake of 60%.

The partners plan to build an LNG plant with an annual production capacity of 16.5 million tons, drawing on feedstock from the South-Tambeyskoye field which holds total proven and probable reserves of 907 billion cubic metres of natural gas.

They also plan to build transport infrastructure including a sea-port and an airport located at Sabetta in the north-east of the Yamal Peninsula.

The deal, signed in the Russian city of St Petersburg last week, will enable Novatek, controlled by billionaires Leonid Mikhelson and Gennady Timchenko, to gain access into the Chinese natural gas market.

As part of the agreement due to close on October 1, CNPC will purchase at least three million tons of LNG per year from Yamal as well as provide “active assistance” in helping to secure financing for the project from Chinese financial institutions.

CNPC chairman Zhou Jiping said his company’s entry into the Yamal project will help guarantee long-term LNG supply to China. We welcome the increase in Russian LNG supplies to China.”

Novatek chairman Leonid V. Mikhelson said:

“This agreement is a very important step in the implementation of the Yamal LNG project. We see CNPC as a reliable partner with considerable experience in international LNG projects, as well as a long-term buyer of LNG representing one of the fastest growing gas markets in the world. We are also looking forward to CNPC’s significant contribution into attracting external financing for the project”.