By Dow Jones Business News, October 22, 2013, 05:05:00 AM EDT
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 firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.