China lent Russia $6bn (£3.2bn) to help the Russian government renationalise the key Yuganskneftegas unit of oil group Yukos, it has been revealed.
Rosneft now controls a significant chunk of Russia's oil output
The Kremlin said on Tuesday that the $6bn which Russian state bank VEB lent state-owned Rosneft to help buy Yugansk in turn came from Chinese banks.
The revelation came as the Russian government said Rosneft had signed a long-term oil supply deal with China.
The deal sees Rosneft receive $6bn in credits from China's CNPC.
According to Russian newspaper Vedomosti, these credits would be used to pay off the loans Rosneft obtained to finance the purchase of Yugansk.
Reports said CNPC had been offered 20% of Yugansk in return for providing finance but the company opted for a long-term oil supply deal instead.
Analysts said one factor that might have influenced the Chinese decision was the possibility of litigation from Yukos, Yugansk's former owner, if CNPC had become a shareholder.
Rosneft and VEB declined to comment.
"The two companies [Rosneft and CNPC] have agreed on the pre-payment for long-term deliveries," said Russian oil official Sergei Oganesyan.
"There is nothing unusual that the pre-payment is for five to six years."
The announcements help to explain how Rosneft, a medium-sized, indebted, and relatively unknown firm, was able to finance its surprise purchase of Yugansk.
Yugansk was sold for $9.3bn in an auction last year to help Yukos pay off part of a $27bn bill in unpaid taxes and fines.
The embattled Russian oil giant had previously filed for bankruptcy protection in a US court in an attempt to prevent the forced sale of its main production arm.
But Yugansk was sold to a little known shell company which in turn was bought by Rosneft.
Yukos claims its downfall was punishment for the political ambitions of its founder Mikhail Khodorkovsky.
Once the country's richest man, Mr Khodorkovsky is on trial for fraud and tax evasion.
The deal between Rosneft and CNPC is seen as part of China's desire to secure long-term oil supplies to feed its booming economy.
China's thirst for products such as crude oil, copper and steel has helped pushed global commodity prices to record levels.
"Clearly the Chinese are trying to get some leverage [in Russia]," said Dmitry Lukashov, an analyst at brokerage Aton.
"They understand property rights in Russia are not the most important rights, and they are more interested in guaranteeing supplies."
"If the price of oil is fixed under the deal, which is unlikely, it could be very profitable for the Chinese," Mr Lukashov continued.
"And Rosneft is in desperate need of cash, so it's a good deal for them too."