Russian state-owned oil company Rosneft and China's CNPC have signed a protocol to set up a joint venture, Vostok Energy, to develop and produce mineral resources in Eastern Siberia.
China will finance the development stage in exchange for access to Russian deposits and stable deliveries of oil and petrochemicals. The venture's authorized capital will be $10 million. Rosneft will control 51% in the company, and CNPC will hold the remaining 49%. CNPC became Rosneft's official partner in March 2006, when the two companies signed a memorandum to establish a venture.
Among other things, the new company will conduct geological and exploration work in Russia, develop mineral deposits and obtain licenses for the use of mineral resources.
The partners have clear goals. China will gain access to production licenses, which will enhance its potential as a buyer of hydrocarbons. In turn, Rosneft expects the Chinese company to fund the exploration of East Siberian deposits and is seeking a stake in Chinese refining facilities in exchange for deliveries of oil and petrochemicals to China.
Analysts believe today the Russian company's output exceeds its refining capacities almost tenfold. Refining its own reserves on Chinese equipment will enable it to capture part of China's fast growing petrochemicals market.
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