Rosneft sells 20% of huge field to Beijing Gas

An employee works on a drilling rig at the Rosneft-owned Prirazlomnoye oilfield outside the Siberian city of Nefteyugansk, Russia. [Photo / Agencies]

Rosneft PJSC agreed to sell 20 percent of its Verkhnechonsk oil and gas field in Siberia for about $1.1 billion to Beijing Gas Group Co in a deal that may give the Russian producer access to China's natural-gas market.

"The competences and capabilities of our partner in the key distribution market will generate significant synergies from our joint operation," Rosneft Chief Executive Officer Igor Sechin said in a statement on Monday. Sechin and Beijing Gas Chairwoman Li Yalan signed the agreement－outlined back in June－during a meeting in St. Petersburg.

Workers stand next to a logo of Russia's Rosneft oil company at the central processing facility of the Rosneft-owned Priobskoye oil field outside the West Siberian city of Nefteyugansk, Russia, August 4, 2016. [Photo / Agencies]

The sale will help Rosneft manage the largest debt load in Russia's oil industry. It has accumulated total debts of more than $40 billion, mainly from its $55 billion acquisition of TNK-BP in 2013.

This year it also agreed to buy Russian oil producer Bashneft PJSC and Indian refiner Essar Oil Ltd. While the Verkhnechonsk deal will bolster the balance sheet, it also helps Russia boost energy ties with China, after trade between the two countries declined last year.

This deal, with one of China's largest distributors of natural gas, gives Rosneft a strategic partner in exploiting the unit's reserves of the fuel. Rosneft gains the possibility of accessing China's local gas market, including end-customers, through gas-supply swaps, according to the statement.

Bloomberg