Although very much interested in the auction CNPC did not ‘publicly’ participate. As such the Russian company walked away with Yuganskneftegaz but it seems with CNPC’s financial backing.
China’s CNPC expressed interest in the auction. A source in the company told a Chinese newspaper that CNPC would buy a small stake in Yuganskneftegaz. Another source in Beijing said CNPC was in talks with Gazprom to participate in the auction. http://www.rbcnews.com/komment/komment.shtml?2004/12/10/871068
YUKOS to supply oil to China in January December 23, 2004 Posted: 09:18 Moscow time (05:18 GMT)
YUKOS has announced its intention to supply 280,000 tons oil to China in January, Russian Railways Vice President Salman Babayev told journalists. According to him, LUKoil plans to supply 240,000 tons to the region. Sibneft will transport 30,000 tons more.
As for the transportation of Russian oil to China in 2005, Russian Railways President Gennady Fadeyev announced that about 10m tons of oil would be supplied, as the Chinese railway infrastructure cannot make the transportation of larger amount of oil possible. Therefore, oil supplies to China will be boosted to 30m tons by 2007-08.
Industry watchers say that China is interested in stable oil supplies from Russia. China has always been acquiring Russian oil assets. Chinese companies wanted to take part in the auction of Slavneft, but they abandoned this idea later. Some experts say that they were granted guarantees of the stability of railroad oil supplies and the construction of a pipeline linking Russia to China instead.
Vice President of China National Petroleum Corporation (CNPC) Zhou Jiping met Gazprom CEO Alexey Miller on December 7, 2004, to discuss Russia’s oil supplies on the Chinese market and Gazprom’s market expansion.
China National Petroleum Corporation is China’s largest state-owned oil and gas company (the government has 100 percent in the company) and a global leader in the sector. CNPC accounts for 79 percent of oil supplies on the domestic market, and holds a 95-percent share of the gas market and a 40-percent share of the market for oil products. The company takes part in 27 projects abroad.
As for the major recent auction of YUKOS’ major oil producing unit Yuganskneftegaz, analysts believe that not only Gazprom and Surgutneftegas will benefit from Baikal Finance Group’s acquirement of Yuganskneftegaz, but CNPC also. Gazprom subsidiary Gazpromneft submitted its application for participating in the auction and another company, Baikal Finance Group, became the auction winner. Baikal Finance Group is not affiliated with Gazprom officially, but there are links between the two market players, some industry watchers believe. Others say that Surgutneftegas is the beneficiary of the scheme.
But recent announcements made by Russian President Vladimir Putin make one believe that CNPC always took part in the deal. Yesterday in the German city of Schleswig Putin said, “one cannot rule out the possibility of Chinese CNPC working with Yuganskneftegaz assets.” He said that Gazprom and CNPC agreed on cooperation in the energy sector and the two partners were to determine the way CNPC is to work with Yuganskneftegaz assets.
Earlier Russian officials made no statements showing Gazprom’s participation in the auction scheme, experts point out. Gazprom will become the owner of Yuganskneftegaz eventually, but before that a number of mediators will acquire this asset. This will make it possible to say that Gazprom is a fair buyer. Experts foresee Gazprom’s and Surgutneftegas’ gains on this news. RosBusinessConsulting
BEIJING. Dec 9 (Interfax-China) - Gazprom and the China National Petroleum Corporation might submit a joint bid for a stake in Yuganskneftegaz, a Beijing source told Interfax. "As far as I know, a CNPC delegation is visiting Moscow, and it has held negotiations with Gazprom's management. The meeting dealt with cooperation between the two companies. It cannot be ruled out that the parties reached an agreement to jointly bid for Yuganskneftegaz," the source said.
Gazprom is also considering the possibility of taking part in the auction together with Indian partners, he said.
"It is so far difficult to say whether Gazprom could pick India or China as an ally for the auction, but both options are under consideration," he said.
The website of the Chinese newspaper Zhongguo Ribao reported earlier, citing a CNPC official in Moscow, that the Chinese corporation is planning to bid in the Yuganskneftegaz auction.
The website cited a CNPC official as saying the company has never abandoned the idea of buying Yuganskneftegaz and has already started preparations for the sale. A CNPC team arrived in Moscow some time ago and a higher level delegation has now also arrived in the Russian capital, the official said.
He did not specify which members of the company's management has arrived in Moscow to prepare for the auction.
Gazprom has refrained from commenting on this information.
Gazprom officially reported earlier that it was engaged in negotiations with CNPC on possible oil supplies, "taking into account that Gazprom is expanding this area of its activity."
At present, OOO Gazpromneft, the wholly owned Gazprom subsidiary, is preparing to bid in the auction in which a 76.79% stake in Yuganskneftegaz, Yukos's core oil producing asset, will be sold.
In March 2004, Russian Railways company and Yukos concluded a deal on supplying oil to China by rail. However, Yukos suspended shipments to CNPC, one of the two major Chinese oil companies, on September 28. As Yukos shipments were carried out under an intergovernmental agreement, China has insisted that Russia comply with it.
Yukos oil supplies to CNPC were expected to reach 1 million tonnes from October to the end of 2004, or about 400,000 tonnes a month. Yukos has maintained supplies to the other major Chinese oil company, Sinopec, of 280,000 tonnes a month through the Naushki border checkpoint and Mongolia. Under the contract, Yukos committed itself to ship 3.86 million tonnes of oil to China throughout 2004.
Russian Railways First Vice President Khasian Zabirov said the company planned to ship 60,000 tonnes of oil provided by Lukoil in November and about 100,000 tonnes in December. Russian Railways is also planning to carry oil provided by Sibneft to China in December.
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