Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Rosneft and CNPC Plan Output of 10M Tons

BEIJING -- State oil firm Rosneft and China's top energy group CNPC aim to produce 10 million tons of crude in Russia within three to five years, a concrete step in closer energy ties between Beijing and Moscow.

The plan is on par with a partnership in China where the two firms plan to build a 200,000-barrel per day refinery near Beijing and to set up no less than 300 gas stations, Rosneft president Sergei Bogdanchikov said Friday.

"We are targeting blocks in eastern Siberia and the Far East. We need to acquire licenses necessary to explore for oil, but I'm confident that we'll see positive results," he told a news conference.

The production goal follows Rosneft's tie-up with China's No. 2 oil firm, Sinopec, in the purchase of a mid-sized oil unit from TNK-BP, Udmurtneft.

Russia is looking to diversify its energy exports away from saturated European markets and considers China, the world's second-biggest oil consumer, as a vital future market.

The growing cross investment, which appears to have picked up pace since President Vladimir Putin's visit to Beijing last March and is worth at least several billion dollars, is on top of growing oil trade between the two nations.

Bogdanchikov said Rosneft also planned to increase the amount of crude his firm supplies to China next year by 130,000 to 140,000 bpd to a total of 400,000 bpd.

The additional barrels may include Rosneft's new crude from Sakhalin-1 due for startup next year and where the Russian firm has a production share of 40,000 bpd.

"If the Chinese are interested and participate in our [export] tenders, we are ready to sell to them," Bogdanchikov said.

Rosneft, the Kremlin's oil vehicle which plans to become a key player in China, has been supplying around 180,000 bpd to China by rail since buying the former production unit of bankrupt oil firm Yukos after a forced state auction.

Russia is now China's fifth-largest crude supplier with exports up 40 percent in the first nine months at nearly 335,000 bpd, official Chinese customs data showed.

Rosneft is set to become a key supplier via Russia's first pipeline to Asia with a branch line leading to northeast China. Gazprom is also planning to build two major natural gas pipelines to China.

Asked whether the government could sell off more of its stake in his company after its July IPO of $10.6 billion, Russia's largest public offering, Bogdanchikov said: "My personal speculation is that there is no such plan."

He said two other Chinese firms, apart from CNPC, which acquired $500 million worth of Rosneft stocks, had bought into the company, but declined to give details.

"In terms of foreign investors, Malaysia's Petronas holds the largest stake and Chinese firms the second," he said.

The Russian government controls 75 percent of Rosneft after the IPO and Rosneft's consolidation of key units. There has been market speculation that Moscow could float more shares.