PetroChina eyes US$10b stake in Russian gas fields

PUBLISHED : Wednesday, 11 September, 2013, 12:00am
UPDATED : Wednesday, 11 September, 2013, 5:02am

PetroChina is seeking to invest in Russian gas fields as part of efforts by China and Russia to conclude gas-supply negotiations that have dragged on for almost a decade, four people with knowledge of the matter said.

The publicly traded unit of state-owned China National Petroleum Corp (CNPC) was interested in spending at least US$10 billion for a minority share of eastern Siberian gas fields operated by Gazprom and Rosneft, said three of the people, who asked not to be named because the deliberations were pri- vate.

"PetroChina is willing to promote all-round co-operation with Russia's oil companies and hopes to invest in Russia's upstream oil-and-gas exploration and development businesses," spokesman Mao Zefeng said.

The two countries are seeking to complete a deal that would see Russia supply as much as 68 billion cubic metres of gas a year, helping to meet the energy needs of Asia's biggest economy. A US$10 billion acquisition would be PetroChina's biggest-ever purchase abroad.

Gas-supply talks between Russia and China started in 2004 and have dragged on as the countries disagreed over price. Two people familiar with Gazprom's thinking, who spoke on condition of anonymity, said the firm would be reluctant to sell stakes in its eastern Siberian fields.

Mao said China's biggest oil and gas producer did not have any more information to disclose on its Russian plans.

"Such a proposal isn't even discussed," said Sergei Kupriyanov, a spokesman at Gazprom in Moscow. Rosneft's press service declined to comment.

Gazprom and CNPC planned to sign a contract for Russian gas supply to China late this year, according to a statement by the Russian producer in February. Gazprom has a monopoly on Russian gas exports.

The assets PetroChina was interested in were near the Siberia-to-Far East pipeline Gazprom plans to build, two of the people said.

The pipeline, which will supply China and also bring gas to the planned liquefied natural gas plant for supplies to Japan and South Korea, may become fully operational by late 2017, Gazprom's website says.

In eastern Siberia, where the pipeline to China and the Pacific coast will originate, Gazprom is developing the Chayanda field, with estimated reserves of 1.2 trillion cubic metres of gas, and the Kovykta gas field, with estimated reserves of 1.5 trillion cubic metres, as well as other fields.

A stake in the Russian fields would help PetroChina hedge higher gas-import prices China might have to pay, because the company would get part of the venture's profits, one of the people said. But attempts to strike a deal could fail due to the political complexities involved.