* Rosneft, CNPC combine on Srednebotuobinsk deposit
* Rare equity participation for China
* Rosneft is ramping up oil supplies to China
* Final deal on gas between Gazprom and China has proved
(Releads, adds detail, analyst comment)
By Vladimir Soldatkin
MOSCOW, Oct 18 Rosneft will cede a
share of its oil riches to China under a memorandum signed on
Friday to jointly develop East Siberia deposits in the first
such deal between China's largest oil company and Russia.
The world's top oil producer, Russia has previously
preferred to sign long-term supply deals backed by loans with
China, the biggest oil importer.
But with net debt of over $57 billion, pressure is growing
on Rosneft to partner with Beijing.
The Russian state-owned company said it signed a memorandum
with China National Petroleum Corp (CNPC) to jointly tap oil
These include the Srednebotuobinsk field previously owned by
oil producer Taas-Yuriakh, which Rosneft recently took over.
Rosneft would have a controlling stake of 51 percent in the
future joint venture, while CNPC will own 49 percent.
"Chinese companies would like to enter upstream projects all
over the world, this is a global trend. I think that Rosneft is
trying to find ways of such cooperation with CNPC, and the
project is just a small proxy," said Alexei Kokin from brokerage
"Rosneft doesn't have endless resources, they understand
that they will have to look for Chinese money."
The deposit is close to the Eastern Siberia-Pacific Ocean
(ESPO) pipeline. Rosneft delivers 300,000 barrels per day of oil
to China via an ESPO pipeline spur and earlier this year agreed
to double supply volumes.
An official at CNPC, who asked not to be named, said the two
companies would likely now start negotiating detailed terms.
"Whether they can sign a solid agreement depends on
commercial terms," he said.
Rosneft has a similar deal with another Chinese company,
Sinopec, which is producing oil just west of the Urals in the
Republic of Udmurtia.
IN NEED OF RESOURCES
Rosneft, which in March acquired Anglo-Russian oil firm
TNK-BP for $55 billion, also needs to increase its upstream base
to honour a pledge to increase sales to China.
Some analysts and observers doubt that Rosneft has enough
resources to boost supplies to China to the agreed level.
Chief Executive Officer Igor Sechin said on Friday that the
company did have sufficient resources to reach its targets.
"The agreements reached prove once again that Rosneft has a
sufficient resource base to meet its strategic goals," Sechin
said in a statement.
According to Rosneft, the Srednebotuobinsk deposit has oil
and gas condensate reserves of more than 134 million tonnes and
over 155 billion cubic metres of gas. Oil production from the
field started this month.
It is expected to produce 1 million tonnes of oil in 2014
and more than 5 million tonnes annually from 2017.
Last month, energy-hungry China overtook the United States
as the world's top net oil importer.
It is on track to spend $500 billion on crude oil imports by
2020, far outstripping U.S. imports which peaked at $335
billion, according to consultancy Wood Mackenzie.
As well as oil, Russia is the world's largest producer of
conventional gas and has been seeking a deal to sell natural gas
Despite years of negotiations, however, state-owned Gazprom
and Beijing have not yet reached a final agreement due
to differences over pricing terms.
Gazprom Chief Executive Alexei Miller said last month that
the company and China's CNPC aimed to reach a final supply deal
(Reporting by Vladimir Soldatkin in Moscow, additional
reporting by Judy Hua in Bejing; editing by Douglas Busvine and