Page last updated at 16:19 GMT, Tuesday, 17 February 2009

Russian and China sign $25bn deal

Oil field in Siberia
Oil will be pumped from Siberia to China

Russia and China have signed a $25bn (£17.54bn) deal that will see Beijing supplied with oil from Siberian fields in exchange for loans to Russian firms.

China Development Bank will lend $15bn to Russian state oil firm Rosneft, and $10bn to pipeline firm Transneft.

In return Russia will supply 15 million tons - 300,000 barrels a day - of oil annually for 20 years.

China is the world's second biggest oil importer, and has looked to diversify its imports away from the Middle East.

'Lot of funds'

Chinese Premier Wen Jiabao said the deal was one of "political importance".

In recent years China has turned to Russia, Kazakhstan, and countries in Africa and South America, as it seeks new oil supply avenues.

Russia views China and Japan, another huge importer of oil, as key markets for its East Siberian oilfields.

"Rosneft and Transneft can't borrow easily, so China steps in...with a lot of funds to lend because of China's huge wealth funds," said Leo Drollas, deputy director and chief economist at the Centre for Global Energy Studies.

"They have trillions of dollars of reserves and they're saying 'we'll lend you this amount to develop the oil fields and the pipeline infrastructure needed' and it will be paid for by deliveries of oil," Mr Drollas added.

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