Russia offers China a stake in Siberian oilfields by Geoffrey Smith @FortuneMagazine September 2, 2014, 5:04 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons Russia has offered China a direct equity stake in one of its most important Siberian oilfield clusters, in a fresh sign of the country’s willingness to embrace Asia as its relations with the West disintegrate. The offer became public Monday, as part of a carefully scripted exchange between President Vladimir Putin and Chinese Deputy Prime Minister Zhang Gaoli at the construction launch of another banner project in the China-Russia energy partnership, the Power of Siberia gas pipeline that will deliver over $380 billion worth of gas to China over the next 30 years. Putin said China would be offered a stake in the Vankor complex of fields in northern Siberia, owned by national champion OAO Rosneft. The step is a big new development in Sino-Russian relations, suggesting that the Kremlin’s long-held opposition to Chinese ownership of conventional, onshore oil resources is weakening, in part because its options for financing investment in new fields have been drastically narrowed by sanctions. “In general, we have a careful approach to admitting our foreign partners, but we of course place no limits on our Chinese friends,” Putin told Zhang. Zhang replied that “I can assure you that China is a reliable partner,” before adding a bizarre personal tribute to Putin. “Everything is now under your control. And you have to trust firmly in your health. You’re looking wonderful,” Zhang told the famously athletic 61 year-old. Analysts at Sberbank in Moscow observed that Rosneft could use the money. Shut out of U.S. and European capital markets by sanctions in retaliation for Russia’s role in the Ukraine conflict, Rosneft needs to repay loans totalling $26 billion within a year. The company had asked the government for up to $40 billion from Russia’s sovereign wealth fund to help it with its financial burden, but Putin said Monday that he didn’t want to draw down its reserves any further. Rosneft’s debts stem mainly from the acquisition of BP Plc’s BP Russian joint venture TNK-BP last year. In addition to cash, BP also got a stake of just under 20% in Rosneft and a seat on its board. BP declined to comment on the deal Monday. The company has already developed strong financial links with China. Last year, it signed a 25-year deal to send China National Petroleum Corp. over 2.5 billion barrels of oil, receiving a $17 billion downpayment in return. Rosneft declined Monday to give any further details about the deal and had still not published anything on its website Tuesday, but the newspaper Kommersant reported that the offer could be for a stake of up to 10% in ZAO Vankorneft, a subsidiary which already produces over 440,000 barrels of oil a day and has nearly 3 billion barrels of proven and probable reserves. “Although China is a partner now, no-one is intending to give them too big a stake,” Kommersant quoted one source as saying. Sberbank analysts estimate the value of the Vankor cluster at around $8 billion. It wasn’t clear which Chinese company would be the preferred partner for the project. The heavily politicised sector is under intense scrutiny at present from President Xi Jinping’s anti-corruption probe, with former CNPC managers Zhou Yongkang and Wang Yongchun among the highest-ranked officials to be placed under investigation. Rosneft’s shares were little changed Tuesday in London. They’re down 16% since the start of the year.