Russia and China have made another stride in bilateral energy cooperation after high-profile oil and gas suppliers from both countries, OJSC Rosneft of Russia and China National Petroleum Corporation (CNPC), agreed to set up a joint venture in China, Sergey Bogdanchikov, president of Ojsc Rosneft revealed on Friday.

Sergey Bogdanchikov, president of Russia's Ojsc Rosneft speaks during a press conference in Beijing November 10, 2006. [chinadaily.com.cn]

Sergey's remarks came days after Russian Prime Minister Mikhail Fradkov was in China for a two-day official visit. Energy deals and cooperation were on his agenda, with a group of 13 deals in the energy sector inked, covering investment encouragement, Russian machinery exports and technical products and a framework agreement on strategic co-operation between oil companies.

The China-Russia Oriental Petroleum & Chemical Corporation, a joint venture, has an annual production capacity of over ten million tons of oil, the president said.

"CNPC accounts for a 51 percent stake and Russia makes up 49 per cent," said the president, adding the future trade volume is expected to reach billions of US dollars.

Rosneft and CNPC set up a joint venture that focuses on oil exploration and production in Russia, according to previous media reports.

Rosneft holds 51 percent of Vostok Energy, the joint venture in Russia, and has three of the five seats on the board.

Russia and China have enjoyed brisk development in oil and gas cooperation after energy-hungry China turned to resource-rich Russia for help during its galloping economic growth.

According to the president of Russia's biggest oil and gas company the joint venture is already under way.

Sergey Bogdanchikov (R) , president of Russia's Ojsc Rosneft speaks during a press conference in Beijing November 10, 2006. [chinadaily.com.cn]

"As a shareholder, what we will do next is to start the construction through financing and recruit staff," Sergey said, adding the joint venture will commence its business in China's market economy.

Sergey said next his company will discuss problems of common concern with the local government, such as land leases.

"Two companies have turned to an outside consulting firm in the hopes of finding a convenient location to build some oil stations and pipe the oil through," says Sergey, adding that both sides are likely to purchase dozens of oil stations in an attempt to be operational by 2007.

China is the fourth largest economy in the world, and consumed 327.3 million tons of crude oil in 2005, accounting for 8.5 percent of the world total, state media reported.

Sergey expressed confidence in the joint venture's future.

"China will double its crude oil consumption in 2015 and we are optimistic about future mutual cooperation."

Rosneft is a vertically-integrated oil and gas company in Russia with upstream and downstream operations in each of Russia's oil-producing regions. The two countries' oil giants have been strengthening cooperation in the energy sector for years.