Beijing Gas Group Company Limited and Russia's Rosneft have closed the deal for the sale of 20 percent stake in Verkhnechonskneftegaz, a subsidiary of the Russian oil giant, for US$1.1 billion.

According to the deal, Beijing Gas will send its directors and senior managers to participate in the management and operation of Verkhnechonskneftegaz.

In November 2016, Beijing Gas and Rosneft signed an agreement in St. Petersburg for the sale of the 20 percent share in Verkhnechonskneftegaz to the Chinese company. Since then, both sides have worked through approvals required for the deal.

Verkhnechonskneftegaz takes charge of developing the Verkhnechonskoye oil and gas field located in the Irkutsk Region of Eastern Siberia. The development of the Verkhnechonskoye field began in October 2008, and now has come to mature. The natural gas field will begin its production in 2021, and export natural gas to China through the Sila Sibiri (Power of Siberia) gas pipeline currently under construction.

The deal will significantly increase capabilities to guarantee supplies of natural gas in Beijing, Tianjin and Hebei, and promote the environmental protection and economic growth of this region.

According to the overall planning of China’s energy authorities, the natural gas consumption of Beijing is projected to increase from 14.6 billion cubic meters in 2015 to nearly 20 billion cubic meters by 2020, and natural gas will make up over 33 percent of non-renewable energy mix in Beijing and thus become its major source of power.

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