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Thu, Jul 20, 2006 - Page 10 News List

CNPC accentuates positives in Rosneft bid

LONG-TERM VIEW CNPC was allocated only one-sixth of the shares it had sought, amid reports that its attempts to access more Russian energy resources had backfired

AFP AND AP , BEIJING AND LONDON

China's largest oil company yesterday expressed optimism about its future cooperation with OAO Rosneft despite its failed bid to acquire a larger stake in the Russian oil giant's share offer.

China National Petroleum Corp (CNPC) in a statement on its Web site confirmed it was allocated only US$500 million worth of shares by Rosneft, just one-sixth of the US$3 billion it had sought.

"CNPC's subscription of Rosneft listed shares will further expand the cooperation and deepen the long-term cooperative relationship," a spokesman said in the statement.

The Financial Times earlier this week had reported that Chinese demands for better access to energy reserves as part of the deal had backfired, annoying the Russians.

The South China Morning Post newspaper said earlier that CNPC, as part of its purchase offer, wanted substantial access to Russian energy resources, including a proposed option to expand an existing contract for Rosneft to supply crude oil to CNPC.

Another option was allowing CNPC to take part in the development of Rosneft's Vankor oilfield in eastern Siberia.

However, the CNPC spokesman emphasized that the two companies' long-term cooperation agreement signed in July last year which he said "set up a fundamental principle of complementary cooperation for common development."

"CNPC and Rosneft have developed a sound cooperative relationship for mutual benefits and win-win solution," the spokesman said.

During Russian President Vladimir Putin's visit to China in March, the two companies also signed a protocol for cooperation which includes exploration and development in Russia, and refining, processing and marketing in China.

The official Xinhua news agency said CNPC's subscription to Rosneft's initial public offering means China "is marching at a fast pace to enter the Russian energy market" and it will enable China to have better access to oil resources worldwide.

CNPC is one of three major foreign energy firms to whom Rosneft offered the chance to buy stakes worth US$1 billion to US$2 billion.

The others -- British Petroleum PLC, Europe's largest energy group, and Petronas, Malaysia's state oil company -- were allocated stakes worth US$1 billion and US$1.1 billion respectively.

The company made its debut on the London Stock Exchange yesterday, after a British judge rejected a challenge from OAO Yukos that allowing the stock to trade would constitute the sale of stolen property.

Rosneft announced on Friday that it would offer shares at a price which set the company's market capitalization at US$79.8 billion -- a higher value than Russia's biggest oil producer, Lukoil.

The 1.38 billion shares, representing 13 percent of the company, were to start unrestricted trading in London yesterday.

Shares in Rosneft began trading on the Russian RTS stock exchange on Monday, where they slid 1.7 percent.

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