Russia signs pipeline deal with China

Russia's second largest oil company Yukos and China National Petroleum Corp (PetroChina) have
signed a US$150hn deal that paves the way for a pipeline to ship up to 700in tonnes of oil
in 2005-2030, Reuters reported. The deal was signed during President flu Jintan's visit to
Russia at the end of May and announced the day after he and President Putin had signed a
declaration stating that energy co-operation was a key prior-ity for the two countries. The
pipeline would cost US$2.5bn to build and would run 2,400km from Russia's Angarsk field
to Daqing in northeast China. The two sides also signed an agreement for Yukos to supply
China with 6m tonnes of crude by rail between 2003 and 2006, awaiting the com-pletion of
the pipeline.
The deal spells out details such as the quality of the oil contract terms and
the pricing formula. However, the two sides will need to sign a final commercial import-
export deal by the end of September for the project actually to go ahead.
The plan has
been under consideration for some time, hut progress in negotiations was held up while
the Russians considered a Japanese counter proposal for a pipeline to transport crude to
the port of Nakhodka on the Sea of Japan, from where it would be shipped to Japan. This
deal appeared to east doubt over the Japanese proposal as officials have said that Russia
does not have enough oil to justify two pipelines to the east.