China Buys £1.6bn Siberian Oil Field

China's state oil company has bought a £1.6bn Siberian oil field from TNK-BP, sealing access to Russia's huge energy reserves for the fuel-hungry Asian economy.

TNK-BP announced on Tuesday that Sinopec, also known as CNPC, would buy its Udmurtneft field. It contains a billion barrels of oil reserves, produces 120,000 barrels a day, and has previously been valued at $3bn (£1.6bn). TNK-BP is half-owned by the UK's British Petroleum.

CNPC defeated a series of rival bids, including one from the Russian gas giant Gazprom in partnership with MOL of Hungary. TNK-BP spokeswoman Marina Dracheva did not name the price, but told Reuters: "We had bids from a few people, with highly competitive prices which were all quite similar. Because of that, other elements became important [in the tender]."

A Beijing oil industry source told Interfax that CNPC would probably buy Udmurtneft with help from the Russian state-owned oil company Rosneft. Such a deal would bolster the Kremlin's control over the country's energy resources and make good a threat to switch its focus from western to Asian energy markets after a series of high-profile pricing disputes with the European Union.

The deal came as a source close to Rosneft told Reuters that CNPC could be a central partner for its flotation, scheduled to raise $10bn next month. Some western investors have balked at purchasing shares in the state oil giant because some of its assets are threatened by legal action.

A Chinese investment would calm the Rosneft flotation, a key part of the Kremlin's efforts to gain international respectability before the G8 summit in St Petersburg on July 15, which it will chair.