China and Russia are to deepen their existing energy industry cooperation after signing a deal to supply oil to China worth $270 billion over the next 25 years.
The deal will see the supply of 365 million metric tons of oil to China starting from next month, according to media reports.
Igor Sechin, the chief executive of Russian state-controlled oil giant Rosneft, was widely quoted after being interviewed during Russia's annual economic forum in Saint Petersburg, who said deliveries could start as early as this year.
The oil is likely to be delivered to China via the existing Eastern Siberia-Pacific Ocean oil pipeline that will pump direct into the Chinese region of Mohe in Heilongjiang province.
The deal was signed on Friday between Rosneft and China National Petroleum Corporation, the country's largest State-owned oil and gas producer.
Asked to comment on the report, a source from CNPC told China Daily that the deal had been in discussion for months, since Chinese President Xi Jinping visited Moscow and an agreement was signed in March.
The source said the price of the deal had been a major sticking point between the nations.
During his visit to Russia on Thursday, Vice-Premier Zhang Gaoli said that China was keen to work together with Russia to maximize the potential for bilateral economic cooperation.
Russia has been looking for new markets for its energy exports because of shrinking demand in Europe, its traditional market, said Liao Na, the vice-president of energy consultancy ICIS C1 Energy.
"The seller and the buyer both have strong willingness to reach the deal provided the price was comfortable for each of them.
"It is a good timing, considering current international oil prices," she said, adding that most institutions and commodity consultancies do not expect any dramatic oil price fluctuations.
She said after the deal was finalized, Rosneft is scheduled to open a refinery in Tianjin in cooperation with a Chinese company, in the second half of the year.
In 2009, the two countries reached a framework agreement in which Russia would deliver about 70 billion cubic meters of natural gas to China annually for 30 years starting from 2014.
China, the world's largest energy consumer, used 145 billion cu m of natural gas last year and will import 78.5 billion cu m of natural gas in 2014, according to data from ICIS C1 Energy.
Liao said the two countries also have huge potential for cooperation in non-traditional energy sectors, and Russia may become the next major supplier of coal to China.
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