China energy exec hints Russian gas deal not dead

MOSCOW (Reuters) - The head of China National Petroleum Corp signaled on Saturday that China was still considering a deal to become Russia's largest single pipeline gas customer even as its supply options, including unconventional and liquefied natural gas, multiply.

Russia’s decision to give China a share of prized Arctic exploration licenses as part of a “breakthrough” deal signals how the world’s largest oil and gas producer and the biggest energy consumer are redrawing the global energy map.

Rosneft is seeking to borrow up to US$30-billion from China in exchange for possibly doubling oil supplies, making Beijing the largest consumer of Russian oil and further diverting supplies away from Europe. Four industry sources familiar with the situation told Reuters Rosneft was in talks with China’s state firm CNPC about the borrowing, which would echo a $25 billion deal the two companies clinched last decade.

Ukraine will take a first major step away from dependency on Russian gas supplies on Thursday when it seals a $10 billion shale gas deal with Royal Dutch Shell. Due to be signed at the World Economic Forum in Davos, the production sharing agreement will mark the biggest contract yet to tap shale gas in Europe and the largest single foreign investment in the former Soviet republic.

Russian Prime Minister Vladimir Putin left China on Wednesday after a visit that yielded $7 billion in trade pacts but no breakthrough on a long-delayed gas deal with the world's top energy consumer.Putin held talks with his Chinese counterpart Wen Jiabao and President Hu Jintao in Beijing on his first foreign trip since he announced plans to reclaim the Russian presidency.Russia is the world's largest producer of energy, and Putin said progress had been made on a 30-year deal to pump gas to China that was signed in 2009 but has been mired in disagreements over pricing.

China National Petroleum Corp., the country’s biggest oil company, is seeking its first stake in the U.S. as Chinese explorers with US$40-billion of cash try to join an energy renaissance unlocking billions of barrels of crude. “We are currently studying” investing in U.S. oil, Jiang Jiemin, chairman of the state-run company, said Monday at the National People’s Congress meetings in Beijing. Domestic rival China Petrochemical Corp. last month agreed to buy stakes in an Oklahoma field from Chesapeake Energy Corp. for US$1.02-billion.

Fracking isn’t just for shale. In Russia, producers are importing techniques from the U.S. to squeeze billions of dollars of extra oil from Soviet-era fields. TNK-BP, Russia’s third-largest producer, will use hydraulic fracturing combined with horizontal drilling in almost half the wells it sinks this year, a sixfold increase in just two years, the company said. OAO Rosneft, OAO Lukoil and OAO Gazprom Neft have similar plans.