China National Petroleum Corporation (CNPC), the nation's largest oil company, has bought US$500 million worth of shares in Russian oil giant OAO Rosneft.

CNPC announced yesterday it had bought the 66.2252 million shares in Rosneft at US$7.55 per share.

The Russian firm is scheduled to go public on both the London and Moscow stock exchanges in an initial public offering (IPO), one of the largest of its kind worldwide.

"CNPC's subscription of Rosneft shares will further expand co-operation and deepen the long-term co-operative relationship," CNPC said in a statement.

The two companies set up a fundamental principle of complementary co-operation for common development in a long-term co-operation agreement signed in July 2005, according to the statement.

After receiving Rosneft's invitation to subscribe to its listed shares, CNPC kept a close track of the IPO process.

Based on its long-term development strategy and the results of a comprehensive evaluation, CNPC officially submitted its subscription proposal to Rosneft on July 12, the statement said.

CNPC's subscription proposal gives full consideration for supporting Rosneft's successful listing and aims to boost pragmatic co-operation between the two companies, it said.

The co-operation between Rosneft and CNPC covers many areas, including possible joint bidding for petroleum exploration and development, as well as equity acquisition and the establishment of a joint venture for upstream activities in Russia and downstream activities in China, the statement said.

Analysts said the move signified that China, the world's second-biggest energy consumer, is marching at a fast pace to enter the Russian energy market, and it will enable China to have better access to oil worldwide.

As China's biggest oil producer, CNPC pumped 6.8 per cent more oil and gas in the first half of this year as energy demand soared in the world's fastest-growing major economy.

Crude and gas output rose to the equivalent of 533.2 million barrels of oil, the Beijing-based company said in a statement.

The production figures also position Hong Kong-listed PetroChina, which is due to post interim earnings in August, to make the biggest earnings of any Asian company in the first six months, analysts said.

PetroChina's oil production rose 1.8 per cent from a year earlier to 419 million barrels, while gas output jumped 31 per cent to 684.7 billion cubic feet (19.4 billion cubic metres).

Source: China Daily