Rosneft Sells 20% stake in Siberian Subsidiary to Beijing Gas

Rosneft, the mostly state owned Russian energy company, signed a binding agreement with China's Beijing Gas on November 7 to sell a 20% stake in an eastern Siberian subsidiary, Verkhnechonskneftegaz.

According to a company announcement, Beijing Gas Group will pay $1.1bn for the stake. "This transaction will allow Rosneft to fully implement the significant development potential of the Verkhnechonsk field, including gas production, and to confirm the strategic partnership with one of the largest distributors of natural gas in China," Rosneft said. The company's C1 + C2 reserves under the Russian system are 115bn m³ of gas and 173mn mt of oil and condensate.

The Chinese company will obtain a share in one of east Siberia's largest producing fields with a developed infrastructure and access to the East Siberia -Pacific Ocean oil pipeline; whilst Rosneft will obtain the possibility to access the local gas market of China, including end-customers, by means of swap supplies of gas.

Rosneft's HQ, opposite the Kremlin

(Credit: Rosneft)

The decision of the Chinese government to convert Beijing power generation from coal to gas and the accelerated transition of automotive transport of China to natural gas motor fuel open wide perspectives for a significant expansion of Rosneft activities in the Chinese market, Rosneft said.

"The agreement with Beijing Gas is a new milestone of the energy dialogue between Russia and China," said Rosneft CEO Igor Sechin. The company has operated the Verkhnechonsk oil and gas condensate field in Katangsky district in the Irkutsk region, since October 2008.

Murat Basboga