Russia and China should boost their energy cooperation, including increasing their oil trade, which could lead to the establishment of new benchmarks and raise the two countries' clout in the market, the head of Rosneft said.

"With oil production growth and respective increase in hydrocarbons trading, we'll be able to establish new marker blends and impact price setting," Rosneft CEO Igor Sechin said.

He added that trading in the countries' currencies would give the ruble and the yuan greater status and reduce the risk of exposure to US sanctions by avoiding US dollar transactions.

Sechin said that Russia should look eastward for growth in its vital oil sector, with the Asia-Pacific region already the biggest consumer and net importer of hydrocarbons.

"Russia-China cooperation can become a significant force to stabilize energy markets," he said. "We can conduct a joint balanced energy policy, in our own interests and in the interests of our partners." He said Rosneft, Russia's largest oil producer, is seeking to develop new production centers in East Siberia, the Arctic and the Far East to "allow us to hedge risks related to insufficient investments into the development of conventional oil reserves."

Russia's Arctic is among the regions that can become a driver of output growth, with Rosneft's resources in the area estimated at 2.6 billion mt. Those resources, which contain crude "of premium quality," require further exploration work, but preliminary estimates suggest output in the area could reach up to 100 million mt/year, or more than 2 million b/d, by 2030, Sechin said.

The Russian government is working on draft legislation to offer "special measures of state support for investment projects in the Arctic area," Sechin said.

Development of the Northern Sea Route that runs from Asia to Europe via the Arctic waters will also accelerate shipments from eastern Asia to Europe and reduce costs by 15%, he said, adding that the route is beneficial for China, as well.

S&P Global