Russia's Rosneft and China National Petroleum Corporation have signed an agreement to deepen their strategic partnership, including through developing joint LNG projects and accelerating work on a joint refinery construction, the Russian company said Monday.
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"The parties intend to apply joint efforts to expand the strategic cooperation, including in the LNG sector, which embraces potential Russian LNG supplies to China," it said in a statement.
The agreement was signed during a visit by China's Premier Li Keqiang to Moscow, with Rosneft's CEO Igor Sechin and CNPC vice president Wang Dongjin inking the deal in the presence of Russia's Prime Minister Dmitry Medvedev.
Russia has been actively developing ties with China over the last few years to diversify its energy export markets away from Europe, and the pace of its reorientation seems to have accelerated in recent months against the backdrop of the ongoing standoff between Western countries and Russia over Moscow's role in the Ukrainian crisis.
"Russia and China are interested in deepening and expanding cooperation in the oil and gas sector," Sechin was quoted as saying after the signing ceremony.
"Our companies have created a favorable environment for cooperation and we intend to further promote long-term mutually beneficial collaboration," he said, according to the company's statement.
The Monday agreement "envisages elaboration of current and potential strategic cooperation areas," including upstream projects in Russian and refining projects in China, according to Rosneft.
In particular, the parties expected to make an investment decision regarding construction of the Tianjin Refinery in March 2016, with a view to completing it by the end of 2019, it said.
The partners previously expected to take the FID on the refinery in early 2017 and to build the facility by "no later than the end of 2020," Rosneft said in October 2013.
Current cooperation between Rosneft and CNPC includes: crude supplies under a long-term crude sale and purchase agreement; crude, oil products and petrochemicals exports within the framework of tenders; Vostok-Energy upstream joint venture to explore and develop an oil project in eastern Siberian Irkutsk region; Vostok Petrochemicals joint venture to build the Tianjin Refinery and the sale of refined products from the facility in China and across regional markets.
Last year, the partners agreed to increase the refinery's capacity to 16 million mt/year, or 320,000 b/d, up from 260,000 b/d originally planned.
Rosneft and CNPC first agreed to conduct the front-end engineering design study for the refinery and held a groundbreaking ceremony to mark the start of construction in September 2010. But there has been little progress on the project since then because of question marks hanging over its economic viability.
At the time, the planned 260,000 b/d refinery was expected to be built by 2015, at a cost of $5 billion.
CNPC owns a 51% stake in the JV, with Rosneft holding the remaining 49%.
Rosneft supplies 300,000 b/d of crude to CNPC under a long-term contract signed in 2009. Under a new deal reached in June, Rosneft is to gradually double crude supplies to CNPC by 2018, the Chinese company said at the time.