China steps up investment in Russia's oil & gas sector

Sep 04, 2015 12:00 AM

Stepping up its investments in Russia's oil sector, China has bought 9.9 per cent stake in a liquefied natural gas project from Russian company Novatek as the two countries signed several agreements coinciding with President Vladimir Putin's recent visit to Beijing.

China's Silk Road Fund Co. Ltd., an investment fund to finance Beijing's proposed "Belt and Road" initiatives, bought 9.9 per cent of shares of the LNG project from Novatek.

State-run Xinhua news agency which reported the agreement has not mentioned the exact amount of money being invested.

This is part of growing Chinese investments in Russia's oil and gas sector, which is struggling due to sanctions from EU and the US over the Ukraine issue.

The two sides also scaled up their strategic, economic and military cooperation as Moscow moved close to Beijing.

Novatek owned 60 per cent of the Yamal Peninsula-based project's shares before the purchase, while French company Total and China National Petroleum Corporation held 20 per cent of its shares respectively.

In total, the three companies had invested over USD 10 billion in the project. The purchase is the Silk Road Fund's first investment in Russia.

China has earmarked USD 40 billion for the Silk Road Fund to support infrastructure projects along both routes of "the Silk Road Economic Belt" and "the 21st Century Maritime Silk Road."

Last year Russia's Gazprom and China's CNPC signed a historic gas deal stated to be around USD 400 billion which will provide China with the natural gas for the next 30 years.

Also last night the two sides signed several agreements during the meeting of Chinese President Xi Jinping and Putin.

Gazprom and CNPC have signed a memorandum on a third project as part of their strategic cooperation over the next five years, Russia Today reported.

The resource base for gas supplies to China from the Russian Far East will be Sakhalin, Gazprom CEO Aleksey Miller said, adding that the volume and timing of the new route will be defined later.

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