News // Asia
Joint venture sets model for China-Russia cooperation in energy field
03 July 2017 , 13:00Neftegaz.RU496
On the vast east European plain 1,200 km east of Moscow, lines of pumping machines stand on the green grassland. It is the location of Udmurtia Petroleum Corp (UDM), an energy joint venture between Russia and China.
The UDM was bought out by China Petroleum and Sinopec, and Russian oil giant Rosneft in August 2006.
Rosneft took a 51 % stake and Sinopec 49 % in the UDM, which is China's 1st and only oil field project in production in Russia.
Located in Udmurtia, a republic in western Russia, the UDM is the republic's largest oil corporation, with 32 oil fields and a daily production capacity of 17,000 tons.
In the UDM building, many awards hang on the wall.
Wang Jun, general manager of Sinopec's Russian unit, said that since Sinopec became the UDM's shareholder a decade ago, the UDM has increased production by 7.7 % and its reserves have gone up 9.5 %.
In 2016, the UDM paid $843 million in tax to the republic's government, accounting for 9.6 % of its total tax revenue.
The company ranks the1st among the republic's taxpayers, Wang said.
The UDM's average annual profit has been more than $450 million.
By the end of 2016, the UDM's net profit totaled $4.877 billion.
This year, the company has discovered 2 new oil fields totaling 800,000 metric tons of reserves in Udmurtia.
The implementation of the China-proposed Belt and Road Initiative and the stability of Russia's domestic political situation and economic policies provide the joint venture with security and guarantee, Wang added.
The Belt and Road Initiative, which comprises the Silk Road Economic Belt and the 21st Century Maritime Silk Road, was brought up by Chinese President Xi Jinping in 2013, with the aim of building a trade and infrastructure network connecting Asia with Europe and Africa along the ancient Silk Road routes.
The UDM's general manager, Andrey Topal, told Xinhua that the participation of Sinopec has optimized the administration of the joint venture and increased production efficiency.
According to Wang, Sinopec's investment in the UDM is like China marrying a daughter to Russia.
How to adapt to the new family and live a good life depends on the good intention and cooperation of the 2 original families.
Topal said the cooperative relationship between Chinese and Russian companies in the UDM is like a pair of chopsticks.
The 2 chopsticks need to work together to catch food, as 1 chopstick will never work.
When asked to comment on the UDM, Chinese Ambassador to Russia Li Hui said it has not only brought profits to both companies and provided experiences for bilateral pragmatic cooperation in the future, but has also enriched the China-Russia comprehensive strategic partnership of coordination.
The success has demonstrated the broad prospects of China-Russia cooperation in the energy field, which should be strengthened and enlarged by the 2 sides, Li said.
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