China and Russia sign US$270 billion energy deal

Pact will deepen their existing energy industry cooperation.

The deal will see Russia supply oil to China worth US$270 billion over the next 25 years. Russia will pump 365 million metric tons of oil to China starting next month.

The deal was signed June 21 between Rosneft, Russia’s oil and gas monopoly, and China National Petroleum Corporation, China’s largest state-owned oil and gas producer.

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.

Russia has been looking for new markets for its energy exports because of shrinking demand in Europe, its traditional market. Rosneft is 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 cubic meters of natural gas last year and will import 78.5 billion cubic meters of natural gas in 2014.