(Bloomberg) -- BP Plc’s $750 million purchase of a Siberian oilfield stake is as much a bet on China as it is on Russia.
Taas-Yuriakh Neftegazodobycha LLC’s blocks near China’s northern border will supply the planned Tianjin refinery on the east coast, according to OAO Rosneft, which sold the 20 percent holding last week. BP Chief Executive Officer Bob Dudley predicts the unit’s natural gas reserves will prove strategic as Russia develops its Far East and builds ties with the world’s biggest energy consumer.
“You have to make a judgment on whether it will have value,” Dudley told Bloomberg News on June 19 in St. Petersburg, referring to the gas reserves. “We believe it will, eventually.”
BP’s Siberian acquisition comes at a time when Russia is turning to Asia for energy sales in response to sanctions imposed by the U.S. and European Union following its annexation of Crimea. China, which toppled the U.S. as the world’s biggest oil importer last year, has agreed to increase its Russian oil and gas purchases as it diversifies it sources of energy.
“BP has been in Russia since the mid-1990s and is probably the most successful of the western majors there and in understanding how Russia works,” said Alex Brooks, an oil and gas analyst at Canaccord Genuity Ltd. in London. “Russia’s potential is substantial and China continues to play a major part in global energy demand.”
BP’s shares gained the most in 10 weeks, rising as much as 1.7 percent to 438.75 pence and trading at 437.05 pence as of 12:51 p.m. in London. The stock has climbed 5 percent this year, compared with a 2.2 percent increase in the FTSE 100 Index.
The company agreed to buy the Taas-Yuriakh stake from Rosneft on June 19, a day after Royal Dutch Shell Plc, Europe’s biggest oil company, signed an agreement with OAO Gazprom to expand a gas export terminal in Sakhalin-2.
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Copyright 2016 Bloomberg News.
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