Russian government backed Rosneft has announced its sale of 20% of its subsidiary Verkhnechyonskneftegaz (VChNG) to Beijing Gas earlier today. The deal is valued at $1.1 billion and will see Rosneft gain access to China’s domestic gas market as well end-users in swap deals.
The move is one of many recently undertaken by Igor Sechin in order to lessen the monopolistic grip Gazprom has on the nation’s pipeline gas exports. Rosneft is lobbying to be part of the gas pipeline to China, although it is being built by Gazprom, but it intends to become the world’s third largest gas producer early in the next decade.
However, this sale is not only driven by monetary gain, this is part of the Kremlin’s push to forging stronger ties with China during a time of political upheaval and global pressure on the country as a result of hacking scandals as well as Syria and the lasting effects of the Crimea annexation. With China climbing the world ranks, it makes for a strategic ally both in the region and in terms of the geopolitical climate.
The gas giant is also entertaining the idea of building a liquefied natural gas plant in the far east, originally having been a plan with Exxon, the company is hoping to be able to build the plant on its own resources, further highlighting their push to dominance in the energy field.