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Last Updated: Tuesday, 18 May, 2004, 00:08 GMT 01:08 UK
Kazakhs agree to China pipeline
Oil refinery
The Kazakhs can help with China's energy needs
Kazakhstan and China have signed a deal to build a 1,240-km oil pipeline from Kazakhstan to the Chinese border.

The agreement was signed during Kazakh President Nursultan Nazarbayev's visit to China, which aimed to boost the countries' trade and economic ties.

It covers the longest section of a proposed 3,000km pipeline across Kazakhstan, which would pump oil from the Caspian Sea to western China.

The pipeline will enable Kazakhstan to export its substantial reserves of oil.

Work on the 1,240-km section is expected to begin this summer.

New markets

Oil from the Caspian has traditionally been exported to Russia, or more recently to Western markets via the Black Sea.

BBC correspondent Ian McWilliam says Kazakhstan's economy has grown strongly in recent years due to foreign investment in oil and gas production around the Caspian Sea.

He says it is now looking for new markets for expanding production.

The vast and growing market in China is reportedly keen to find new energy sources and Beijing has been cultivating economic ties with Central Asia.

Exporting oil to the east, rather than the west, requires a 3,000 km pipeline across the plains of central Kazakhstan.

Our correspondent says that Kazakh officials also hope to sign a memorandum with China that could lead to the construction of a new railway across Kazakhstan - eventually to link China with Istanbul.

The BBC's Dominic Hughes
"Work on the new pipeline is expected to start in August"

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