Russia and China reach agreement on two huge oil and gas supply deals: Rosneft (RNFTF), the world's largest listed crude oil producer, will supply Sinopec (SNP), China's largest oil refiner, with 10M metric tons/year of oil for 10 years; and Novatek (NOVKY), Russia's largest independent natural gas producer, will deliver 3M tons/year of liquefied natural gas from its Yamal LNG project to China National Petroleum (PTR) for 15 years.
Russia is looking increasingly to Asia for customers and funding to help develop its vast energy reserves, with demand in China and elsewhere in Asia soaring while it shrinks in other industrialized countries.
Gazprom (OGZPY.PK) and Novatek (NOVKY.OB) reportedly want to buy Eni's (E) 29.4% stake in Russian gas company SeverEnergia, which would help the Russian duo counter the influence of Rosneft (RNFTF.PK), which last month agreed to purchase Enel's indirect stake in SeverEnergia for $1.8B.
The contest in Russia for gas resources and markets comes to a head as the government reviews a proposal for a partial lifting of Gazprom's export monopoly for tanker-shipped liquefied natural gas from the start of next year.
SeverEnergia owns licenses for nine gas fields in Russia, with proven and probable reserves of 7.3B boe.
The agreement allows Novatek, Russia's no. 2 gas producer, to strengthen its position in the country's domestic gas market, where it has been increasing market share at the expense of Gazprom (OGZPY.PK) and other companies.
Last year, Novatek accounted for 35% of E.ON Russia's gas purchases of 13.5B cu. meters.