Russia's second largest oil producer Lukoil expects to increase oil exports to China, with its oilfield project in Iraq about to be put into production, the company's chief executive said on Monday.

Vagit Alekperov, chief executive officer of OAO Lukoil Oil Co, told reporters in Beijing the company is developing independently its project at Iraq's West Qurna-2 field. It is expected to go into production this year with an annual oil output reaching 1.2 million tons in 2014.

"Because the project in Iraq's West Qurna-2 field is coming to an end, we hope to increase our exports to China," said Alekperov, adding that they also aim to expand exports of crude oil and refined products such as lubricants to China, where oil consumption has been in great demand because of rapid economic growth.

Russia's largest privately owned oil company has production ventures abroad with China's two biggest oil companies, China National Petroleum Corp (CNPC) and China Petroleum & Chemical Corp, also known as Sinopec Ltd.

Lukoil and CNPC jointly participate in the international consortium on Aral, the gas transport project in Uzbekistan to supply gas to China. It also extracts oil and gas from two fields in Kazakhstan jointly with CNPC and from four fields in partnership with Sinopec.

To further penetrate the Asian market, Moscow-listed Lukoil, which has shares traded on the London stock exchange, also plans a listing in Hong Kong, but Alekperov said the decision has been postponed because of a lack of a listing agreement between regulators in Russia and Hong Kong.

Last year, the company was also considering listing in Shanghai because China had planned to set up an international board in Shanghai to attract foreign listings, but that has been delayed repeatedly for years.

Lukoil, which accounts for 2.1 percent of world oil production, exports oil products of 800,000 to 850,000 tons every year.

Other Russian energy companies also plan to increase exports of both oil and natural gas to China, but the negotiations over the latter have hit some bumps because of a lack of agreement on prices.

Because growth in China's energy consumption and Russia's energy output are resulting in a mutual dependence, energy trade between Russia and China has intensified in recent years.

Earlier reports said that Rosneft, Russia's state-owned oil giant, aims to more than triple its annual oil exports to China, from 15 million tons last year to 45 to 50 million tons, which will make China the largest user of Russian oil.

Consulting firm Wood Mackenzie forecast that Russia, where 60 percent of fiscal revenues come from oil and gas exports, could be selling more than 100 million metric tons of oil to China within 12 years with energy trade volume expected to quadruple by 2025.

Wang Zhen, deputy head of the China University of Petroleum, said Russia's interest in penetrating China's energy markets is expanding because China's economic growth as well as urbanization have fueled a huge demand for energy.

But he also warned that negotiations on the future terms of cooperation between Russian and Chinese companies might be more difficult when it comes to large projects because Russia may have to consider how deep Chinese companies may be allowed to get involved in any projects.

Apart from oil and gas, the two countries also cooperate in electricity and nuclear power plants.

lvchang@chinadaily.com.cn

(China Daily USA 10/15/2013 page15)