Beijing Enterprises shares plunge after buying minority stake in Russian oil and gas producer
BJE’s maiden foray into upstream production. Official signing witnessed by Premier Li Keqiang and Russian Prime Minister Dmitry Medvedev
Shares in Beijing Enterprises (BJE), which has exclusive right to distribute natural gas in the capital city, plunged as much as 8.6 per cent after it announced it plans to buy a minority stake in a Russian oil and gas producer for US$1.1 billion.
The deal, subject to customary regulatory approvals, is BJE’s maiden foray into upstream oil and gas production and its signing on Monday was witnessed by Premier Li Keqiang and Russian Prime Minister Dmitry Medvedev.
It came just over four months after parent Beijing Enterprises Group inked a broad agreement on potential cooperation in the oil and gas sector, in the presence of President Xi Jinping and Russian President Vladimir Putin.
“The target company possesses significant gas reserves in East Siberia, which both parties are willing to explore in good faith a possibility to supply to China,” BJE, the municipal government’s Hong Kong-listed flagship conglomerate, said in a filing to the stock exchange on Wednesday.
“The acquisition represents strategic importance for the group through helping improve the security
of gas supply to Beijing city as well as enhancing the group’s industry position in the gas