Beijing, May 29: After overcoming stiff competition from Japan, China has finally clinched a major multi-billion dollar oil pipeline deal with Russia that could reduce the fastest developing country's reliance on oil from the crises-ridden Middle East. Russia's Yukos Oil Company and China National petroleum Corporation (CNPC) signed a general agreement yesterday, setting out key aspects such as the quality of oil to be supplied, contractual terms and the pricing formulas, the official Chinese media reported today. The major Sino-Russian agreement that is valid for 25 years formed part of Chinese President Hu Jintao's ongoing state visit to Russia, Xinhua news agency said. The general manager of China National Petroleum Corporation (CNPC) Ma Fucai said the supplies would begin in 2005 and volumes would be 20 million tonnes annually during the first five years and 30 million tonnes annually from 2010 on. Xinhua reported that the deal would be worth 150 billion US dollars over the 25 years and the Russian side stood to receive about 60 billion dollars.

The Russian government has decided to build a key oil pipeline from Angarsk in western Siberia to Nakhogka in the Pacific coast on the Sea of Japan, with a 2,400-kilometre separate branch going to the northern Chinese oil city of Daqing.

"The pipeline construction is the biggest project in Sino-Russian economic co-operation, and it is good news for both sides,'' said Ma Fucai, general manager of CNPC.

Bureau Report