Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Source: $1.7Bln China Pipe Deal Close

SHANGHAI, China -- Russia and China are close to a deal to build a $1.7 billion crude oil pipeline from eastern Siberia to northeast China, sources close to No. 2 oil producer Yukos, which is involved in negotiations, said Wednesday.

Yukos and the state-owned China National Petroleum Corp. have completed a feasibility study on the project and could sign a deal as early as next month, a Beijing-based source said.

The pipeline would be crucial to China, which aims to reduce reliance on imports from potential hot spots in the Middle East.

The 2,400 kilometer pipeline, which could be under construction next year, would transport about 20 million metric tons of crude per year when finished in 2005.

Russia, the world's second-largest oil exporter, is striving to locate markets for its remote eastern Siberian fields as the country's crude output continues to boom. "Technical details aren't a problem, it's a matter of winning administrative approval now," the source said. "We've finished the feasibility report. Both governments are scrutinising it and it's awaiting approval."

Yukos' chief representative in China, Sergei Prisyazhniuk, confirmed the two sides -- which had been thrashing out thorny details like prices and contractors -- were close to an agreement, but declined to elaborate.

CNPC officials could not be reached for comment, but Yukos sources said CNPC, China's flagship energy producer, had sent a delegation to Moscow to discuss a variety of energy deals.

Analysts say Russian supply will be key in coming years as China, worried that 60 percent of its imports originate from the Middle East, hunts for alternative energy sources.

The pipeline, running from Angarsk near Irkutsk in Siberia to China's industrial northeast, could supply 30 million tons of oil a year from 2010 to 2030.