Rosneft has closed the sale of 20% shares in its subsidiary Verkhnechonskneftegaz to China-based Beijing Gas Group Company for around $1.1bn, as the parties intend to create a vertically integrated system of cooperation.

The Chinese company has earned interest in an Eastern Siberian producing field with developed infrastructure as part of the acquisition, as well as access to the Eastern Siberia–Pacific Ocean (ESPO) oil pipeline that connects Russia with a number of Asian countries.

In exchange, Rosneft will now have access to China’s domestic gas market and end users via swap deals.

Rosneft CEO Igor Sechin said: “The Implementation of the project of Beijing Gas 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.”

Verkhnechonskneftegaz has a potential hydrocarbon reserve resource base of $3.2 per barrel.

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Rosneft intends to realise the potential of the Verkhnechonskoye field and its natural gas production capability through the sale of stake in the project.

"The Implementation of the project of Beijing Gas joining the Verkhnechonneftegaz enterprise will allow us to enter the rapidly growing Chinese market."

The deal will also allow the company to enhance its cooperation with Beijing Gas Group.

Rosneft noted that it has seen increased prospects in the Chinese gas market following the decision by Chinese officials to switch to natural gas motor fuel for transportation, and gas for power generation.

Rosneft and Beijing Gas are also contemplating the exploration of hydrocarbons, fields development, production and sale of gas in the Eastern Siberia and the Far East region as part of the partnership arrangement.

Verkhnechonskneftegaz holds a license to develop the Verkhnechonskoye field, which currently produces 8.5 million tonnes of oil per year with recoverable reserve of 173 million tonnes of oil and gas condensate and 115 billion cubic metres of gas.

Image: Rosneft Headquarters, Sofiyskaya Embankment in Moscow. Photo: courtesy of NVO / Wikipedia.