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. Last Updated: 07/27/2016

Yukos, Transneft in China Pipeline Accord

Russia's national pipeline monopoly, Transneft, and Yukos oil major agreed to cooperate on construction of a $1.7 billion Russia-China pipeline, Yukos said in a statement published Monday.

The pipeline is expected to be completed by 2004, and will export crude oil to China via Mongolia, the statement said.

The new pipe is expected to have up to 30 million metric tons of crude oil a year put through. Russia's total crude export volume currently stands at 130 million metric tons a year.

The China National United Oil Corp., or Chinaoil, represents the deal from the Chinese side.

In the past, Transneft and Yukos have had a rather uneasy relationship over the planned pipeline to China, analysts said.

After an initial agreement between the two had been signed a year ago, Transneft's current president, Semyon Vainshtok, declared the project inefficient and pulled Transneft out of the deal soon after he was appointed to head the pipeline operator last fall.

The Transneft-Yukos agreement announced Monday paves the way for the finalization of full-scale feasibility studies on the project and for the final international deal to be concluded during an upcoming top-level Russian-Chinese meeting.

Acting President Vladimir Putin told a visiting Chinese delegation recently he is interested in making China one of his first stops should he win the March 26 presidential election.

Yukos head Mikhail Khodorkovsky said last week he hoped such a meeting could take place soon after the elections.

Steven Dashevsky, an oil analyst with Aton brokerage, said the deal between Transneft and Yukos indicated that both companies had finally come to understand that neither of them can close the deal separately.

"They just understood that they can't really exist without each other," Dashevsky said.