ROSNEFT & BEIJING GAS DEAL
ROSNEFT - Rosneft and Beijing Gas Group Company Limited ("Beijing Gas") closed the deal for sale and purchase of 20% shares in Verkhnechonskneftegaz (a Rosneft subsidiary). The price of purchased 20% stake amounted to around USD 1.1bln.
As a result of the transaction, the parties are going to create a vertically integrated system of cooperation. The Chinese company acquires a stake in one of the largest producing fields in Eastern Siberia with developed infrastructure and access to the ESPO pipeline while Rosneft gets an opportunity to enter China's prospective domestic gas market, including end users via swap gas supplies.
The project evaluation proves the high potential of the Verkhnechonskneftegaz resource base: it is $3.2 per barrel of hydrocarbon reserves (in terms of 2P category using PRMS method).
The sale of the stake in the project will allow Rosneft to fully implement the significant potential of the Verkhnechonskoye field, including natural gas production, as well as strenghten the strategic partnership with one of the largest natural gas sales companies in China.
Taking into consideration the decision of the PRC authorities to transfer Beijing's electric power from coal to gas and to accelerate the transfer of China's motor vehicles to natural gas motor fuel, the deal opens up broad prospects for Rosneft's gas business at the Chinese market.
"The Implementation of the project of Beijing Gas corporation joining the Verkhnechonneftegaz enterprise will allow us to enter the rapidly growing Chinese market. The eastern direction is one of the most prospective and strategically important for us. Cooperation with Beijing Gas is a good example of Rosneft's integral approach, which contributes to the creation of a reliable energy bridge between Russia and Asia-Pacific countries", Rosneft Chief Executive Officer Igor Sechin said.
Also, Rosneft and Beijing Gas are considering the options for the development of integrated cooperation in the Eastern Siberia and the Far East region, providing for exploration of hydrocarbons, fields development, production and sale of gas.
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REUTERS - Brent LCOc1 futures fell 43 cents, or 0.5 percent, to $79.14 a barrel by 0218 GMT, after climbing 35 cents on Tuesday. Last week, the global benchmark hit $80.50 a barrel, the highest since November 2014. U.S. West Texas Intermediate (WTI) crude CLc1 futures eased 25 cents, or 0.4 percent, to $71.95 a barrel, having climbed on Tuesday to $72.83 a barrel, the highest since November 2014.
FT - Most oil majors can now cover dividends and capital expenditure at prices around $50 per barrel, meaning that, at $80, they make a healthy surplus.
EIA - The United States remained the world's top producer of petroleum and natural gas hydrocarbons in 2017, reaching a record high. The United States has been the world's top producer of natural gas since 2009, when U.S. natural gas production surpassed that of Russia, and the world's top producer of petroleum hydrocarbons since 2013, when U.S. production exceeded Saudi Arabia’s. Since 2008, U.S. petroleum and natural gas production has increased by nearly 60%.
PLATTS - China became the largest contributor to global LNG consumption growth in 2017. It surpassed South Korea as the world's second largest LNG importer and its share of global LNG demand is expected to converge with that of Japan by 2030.