Rosneft and Beijing Gas Group Company Limited closed the deal for sale and purchase of 20% shares in Verkhnechonskneftegaz. The price of purchased 20% stake amounted to around USD 1.1bln.
As a result of the transaction, the parties are going to create a vertically integrated system of cooperation. The Chinese company acquires a stake in one of the largest producing fields in Eastern Siberia with developed infrastructure and access to the ESPO pipeline while Rosneft gets an opportunity to enter China’s prospective domestic gas market, including end users via swap gas supplies.
The project evaluation proves the high potential of the Verkhnechonskneftegaz resource base: it is $3.2 per barrel of hydrocarbon reserves (in terms of 2P category using PRMS method).
The sale of the stake in the project will allow Rosneft to fully implement the significant potential of the Verkhnechonskoye field, including natural gas production, as well as strenghten the strategic partnership with one of the largest natural gas sales companies in China.
Taking into consideration the decision of the PRC authorities to transfer Beijing’s electric power from coal to gas and to accelerate the transfer of China’s motor vehicles to natural gas motor fuel, the deal opens up broad prospects for Rosneft’s gas business at the Chinese market.
“The Implementation of the project of Beijing Gas corporation joining the Verkhnechonneftegaz enterprise will allow us to enter the rapidly growing Chinese market. The eastern direction is one of the most prospective and strategically important for us. Cooperation with Beijing Gas is a good example of Rosneft’s integral approach, which contributes to the creation of a reliable energy bridge between Russia and Asia-Pacific countries”, Rosneft Chief Executive Officer Igor Sechin said.
Also, Rosneft and Beijing Gas are considering the options for the development of integrated cooperation in the Eastern Siberia and the Far East region, providing for exploration of hydrocarbons, fields development, production and sale of gas.
Image Source: Rosneft