Rosneft, CNPC target joint East Siberia oil production

Russia’s top crude producer Rosneft has agreed to cede a share of its oil riches to China, the world’s top oil importer, signing a memorandum on Friday to jointly develop East Siberia deposits.

Russia, the world’s top oil producer, has previously preferred to sign long-term supply deals with China backed by multi-billion-dollar loans.

The Russian state-owned company said it signed a memorandum with China National Petroleum Corp (CNPC) to jointly tap oil reserves including the recently acquired Srednebotuobinsk field, part of Taas-Yuriakh oil producer.

Rosneft would have a controlling state of 51 per cent in the future joint venture, while CNPC will own the remaining 49 per cent.

The deposit is close to the Eastern Siberia-Pacific Ocean (ESPO) pipeline. Rosneft delivers 300,000 barrels per day of oil to China via an ESPO pipeline spur and earlier this year agreed to double supply volumes.

Rosneft, which in March acquired Anglo-Russian oil firm TNK-BP for US$55 billion, needs to increase its upstream base to honour its pledge to increase sales to China. Some analysts and observers doubt that Rosneft has enough resources to boost the supplies to China to the agreed level.

Chief Executive Officer Igor Sechin said on Friday the company has enough resources to reach the targets.

“The agreements reached prove once again that Rosneft has a sufficient resource base to meet its strategic goals,” Sechin said in a statement.

According to Rosneft, Srednebotuobinsk deposits has oil and gas condensate reserves of more than 134 million tonnes and over 155 billion cubic metres of gas. Oil production from the field started earlier this month.

Last month, China overtook the United States as the world’s top net oil importer.

According to consultancy Wood Mackenzie, China is on track to spend US$500 billion on crude oil imports by 2020, far outstripping the peak cost ever incurred by the United States on crude imports of US$335 billion.