MOSCOW--Two of Russia's top energy producers announced Tuesday
agreements with China to deliver oil and gas, as the countries move
to cement stronger ties.
Under the terms of the deal, Rosneft (ROSN.RS) the world's
largest listed crude oil producer will supply Sinopec
Group--China's largest oil refiner--with 10 million metric tons of
oil a year for 10 years, Rosneft President Igor Sechin said
following a meeting of top energy and political officials in
Beijing.
Russian Prime Minister Dmitry Medvedev later told reporters that
the Rosneft-Sinopec contract is valued at around $85 billion,
Russian news agencies reported.
Russia's largest independent natural gas producer, OAO Novatek
(NVTK.RS), said it had agreed to deliver 3 million tons a year of
liquefied natural gas from its Yamal LNG project to China National
Petroleum Corp. for 15 years. The price will be indexed to the
Japanese Crude Cocktail, a commonly used reference price index for
long-term LNG contracts in Japan, the company said.
Moscow is increasingly looking to Asia for customers and funding
to help develop its vast energy reserves, with demand in
oil-and-gas-deficient China and parts of Asia soaring while it
shrinks in other industrialized countries.
The growth in Russia-China energy links also comes at a time
when global energy trade flows are being rechanneled as huge
hydrocarbon reserves are freed from shale-rock formations in North
America. Coal and gas normally sold to the U.S. is being displaced
to Europe, in turn undermining demand for Russian gas.
"The agreements reached today are the evidence of consistent
development of large-scale cooperation with our Chinese partners.
The agreement will help Rosneft arrange additional funding for
exploration and production projects and construction of the
necessary infrastructure," Mr. Sechin said in a statement.
Additionally, Russia mining, metals and energy conglomerate En+
Group said it had signed a strategic cooperation agreement with
Chinese power and coal producer China Huaneng Group to jointly
develop power projects in Russia.
Mr. Medvedev, after meeting Chinese counterpart Li Keqiang, said
he hoped a natural gas delivery contract between Russian state gas
producer OAO Gazprom (GAZP.RS) and China would be signed soon.
"During our negotiations, great attention was paid to the topic
of oil and gas," Mr. Medvedev, who was once Gazprom's chairman, was
quoted as saying. "Hopefully, the agreements on gas we are about to
achieve soon will be turned into documents in a very short
time."
Write to Lukas I. Alpert at lukas.alpert@wsj.com
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