Rosneft to attract Chinese, Korean investment to Arctic shelf

Igor Sechin, former Deputy Prime Minister and currently CEO of Russia’s largest oil company (Rosneft), concluded a three-day visit to China where he met with the heads of its three largest oil companies, CNPC, Sinopec and CNOOC. Rosneft and the Chinese companies agreed to form a working group to study possible joint development of Arctic shelves in the Barents and Pechora Seas.

Sechin had previously visited South Korea and met with the heads of KOGAS and STX (a world leader in ship construction, construction supplies and hydrocarbon extraction).

“[A] partnership with this companies will give us access to new technologies and will open new markets for exporting LNG,” commented Rosneft. Valery Nesterov of Sberbank Investment Research confirmed that cooperation with these companies would help Rosneft utilize new technologies to accelerate development of the fields.

In addition, Rosneft has signed a memorandum of mutual understanding with Sinopec that envisions the possibility of increasing oil deliveries to China, a company representative told Interfax.

"Agreement in principle on increasing deliveries has been reached. Documents have been signed that make it possible to begin substantive negotiations," this source said.

The Rosneft representative said that during a visit by Rosneft President Igor Sechin to China agreements were also signed with China National Petroleum Corporation (CNPC) concerning joint efforts in geological prospecting and resource extraction on Russia's continental shelf. Chinese companies have been offered involvement in offshore projects in the Barents and Pechora Seas.

Russia is supplying China with 15 million tonnes of oil annually via an offshoot of the Eastern Siberia - Pacific Ocean pipeline (ESPO). Rosneft and Russian oil pipeline company Transneft concluded 20-year agreements in 2009, under which deliveries began on January 1, 2011. In return for the long-term deliveries, Rosneft received from Chinese banks a credit of $15 billion and Transneft obtained one of $10 billion.

The story is based on materials from Kommersant and Interfax.

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