UPDATE 2-Rosneft sells oil to China, eyes gas sales

Published 09/29/2010, 03:50 AM
Updated 09/29/2010, 03:52 AM
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* Rosneft wants to sell natural gas to China as well as oil

* Sold 550,000 T technical oil to fill new pipeline

* Sale at market price, no discount

(Adds background, wraps in Gazpromexport)

By Denis Dyomkin and Jessica Bachman

PETROPAVLOVSK-KAMCHATSKY/YUZHNO-SAKHALINSK, Russia, Sept 29 (Reuters) - Rosneft wants to pump natural gas to China and has closed a deal to sell oil to the world's fastest growing energy consumer ahead of schedule, Rosneft's head said on Wednesday.

"Gazprom works with gas. But Rosneft also has large resources, so of course we will consider such cooperation," newly appointed Rosneft President Eduard Khudainatov told reporters on a tour of Russia's energy assets.

Russia has a deal to sell gas to China at a rate of 30 billion cubic metres a year from end-2015 but price talks have been bogged down for years.

The head of state gas pipeline monopoly Gazprom's export arm said on Wednesday at a conference on Sakhalin island they were now "closer by $60." Russian officials have said a final price deal is expected by the middle of 2011.

Khudainatov's statement could indicate Rosneft is ready to take on Gazprom, weakened in its key European export business by competition from shale gas and pressure for more spot pricing, for the potentially lucrative business in China.

The licence holder for the field to supply China, Kovykta, is undergoing bankruptcy and is likely to be transferred to the state for disposal.

OIL

Rosneft chairman Igor Sechin, deputy to powerful Russian Prime Minister Vladimir Putin, visited China earlier this month to close a deal to supply oil to fuel-hungry Beijing from a new 50-50 refinery joint venture.

The first batch of oil to China -- so-called technical oil to fill a branch of the new East Siberian-Pacific Ocean (ESPO) -- was sold at a price formula pegged to the cost of supplies from Russian Pacific port of Kozmino, with zero transit tariff, Khudainatov said.

"We were asked by our (Chinese) partners for it ... So we have sold, on good conditions for Rosneft, for market price, 550,000 tonnes. No discounts," he said.

China will start testing its section at the end of October and Russia will begin test-pumping about 600,000 tonnes of oil in November or December, according to Chinese and Russian officials.

Russian President Dmitry Medvedev and his Chinese counterpart Hu Jintao attended a ceremony to mark the completion of the Chinese branch of the pipeline on Monday.

The pipeline is set to start bringing 300,000 barrels per day across the border on Jan. 1, 2011, giving Russia a new export route.

Khudainatov said state-controlled Rosneft, Russia's top oil producer, would also like to sell natural gas to China as well as oil, and is talking to Gazprom on the project.

"On this subject we want to meet with the head of Gazprom in the nearest future and look into it. We have agreed on this."

Rosneft has natural gas deposits in eastern Russia. (Writing by Toni Vorobyova and Melissa Akin; editing by James Jukwey)

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