MOSCOW, Oct 28: China and Russia signed a pipeline deal on Tuesday to create a new overland supply route for Siberian oil as the two countries negotiate a package of export-backed Chinese loans expected to exceed $20 billion.

Russian pipeline monopoly Transneft and China National Petroleum Corp (CNPC) agreed to build a spur to carry 15 million tons a year of oil (300,000 barrels per day) between the countries’ trunk pipelines from 2009.

Russia’s top energy official, Deputy Prime Minister Igor Sechin, said Russian oil firms would receive “considerable” loans from China in return for increased oil supplies and that the exact amount would be determined by individual projects.

“Financing is required to realise major projects,” Sechin told reporters after the signing ceremony, attended by Russian Prime Minister Vladimir Putin and Chinese Premier Wen Jiabao.

“The sum of the loans will be determined by the projects.

It’s considerable,” Sechin said.

Russia, the world’s second-largest oil exporter after Saudi Arabia, is seeking to diversify its exports away from the West and is targeting China as the main market for oil that will be extracted from its new generation of fields in East Siberia.

Three industry sources close to talks said they were in talks to secure between $20 billion and $25 billion in Chinese loans in exchange for greater supplies of Russian oil.

The sources said such a deal would give Beijing access to 300 million tons of Russian oil over the next 20 years — or 15 million tons a year, the capacity of the pipeline spur. This would be enough to meet four per cent of China’s annual demand.—Reuters