CNPC (Hong Kong) is to pay more than one billion yuan (about HK$930.9 million) to its parent for a 70 per cent production sharing interest in an oilfield in the northeast province of Liaoning. The announcement of the deal came about a year after the listed arm of the China National Petroleum Corp revealed it was in discussion to jointly develop and produce crude oil in the Leng Jiapu Oilfield in Liaohe. The firm will finance the project by net proceeds of about $596 million from a share subscription, expected to be completed this month, medium to long-term debt or equity funding, and cashflow generated from the project. It is to pay one billion yuan for the 70 per cent of development and exploration costs, US$65.50 million as its share of the cost of development operations in the first two years, plus other expenses. The contract has a term of 20 years. CNPC (Hong Kong) chairman Zhang Ruchun said: 'It is the objective of the board [of directors] to develop the company into a highly profitable petroleum company with diversified petroleum operations and a strong financial position.' The oilfield started commercial production in 1994.