Beijing: Rosneft PJSC, the world’s largest publicly traded crude producer, agreed to sell a stake in a key unit to China as Russian President Vladimir Putin seeks to bolster energy ties with Asia.
The state-run company committed Saturday to negotiating the sale of 20 per cent of its Verkhnechonsk unit to Beijing Enterprises Group Co., Rosneft said in a statement. The deal was signed in Beijing in the presence of Putin and Chinese President Xi Jinping, during a visit meant to boost trade between the two countries.
Talks on the stake in the East Siberian unit, which increased its oil production 5 per cent last year to 8.6 metric tonnes, or about 170,000 barrels a day, will be completed “soon,” Rosneft Chief Executive Officer Igor Sechin told reporters in Beijing. The Russian company plans to sign binding documents not later than the fourth quarter.
China has provided more than $100 billion to Russian energy firms in the past decade through loans and oil-supply advance payments, helping Rosneft become the world’s top publicly traded producer in 2013. Putin travelled to Beijing as joint projects with China are losing momentum and after trade between the two countries declined last year amid Russia’s longest recession in two decades.
Seeking buyers
Russia has been seeking buyers for 19.5 per cent of Rosneft, which pumps more crude than Exxon Mobil Corp, to plug a deficit in the nation’s budget. The government in Moscow is now considering selling the stake to China and India, the two nations driving growth in global energy demand, two people with knowledge of the matter said earlier in June.
Sechin declined to comment on privatisation, saying Rosneft is preparing more deals with Chinese companies in Russia. He said the company plans to wrap up months of talks by early September on selling 49-percent stakes in two East Siberian fields, Russkoye and Yurubcheno-Tokhomskoye, to China Petroleum and Chemical Corp.
Rosneft agreed in Beijing to build a petrochemical plant in Russia’s Far East with China National Chemical Corp, a project the Moscow-based exporter has been seeking to develop for more than five years. ChemChina will get a 40 per cent stake in the Eastern Petrochemical Co. unit.
Supply agreement
The project will probably cost more than 1 trillion roubles ($15.4 billion), according to the most recent estimate, in 2013. Rosneft, in turn, signed a one-year supply agreement to ship as much as 2.4 million metric tonnes of oil to ChemChina.
The agreements were among more than 30 pacts Russian and Chinese companies and regulators signed in Beijing today, most of which were the framework for deals that must now be finalised. The two governments may also reach an agreement by the end of the year on Russia’s first high-speed rail line, connecting Moscow with the city of Kazan, Putin said.
