MOSCOW, Feb 17: Russia and China on Tuesday agreed a 20-year deal to pump Russian oil to the energy hungry Chinese market in return for financing for Russian oil majors Transneft and Rosneft, Transneft said in a statement.

“Russia will deliver to China 15 million tons of petrol a year over 20 years under financing conditions which suit both sides,” said Russian Deputy Prime Minister Igor Sechin, according to Transeft.

A source close to Chinese state oil company CNPC was quoted by the Interfax news agency as saying that China would grant loans worth $25 billion to the Russian oil firms in return.

According to Transneft it will benefit from financing worth $10 billion as part of the deal. The other $15 billion will go to Rosneft. The contracts were signed in Beijing during a meeting between Sechin and Chinese Deputy Prime Minister Wang Qishan.

As part of the deal, the two sides will also build an extension of the Russian Siberia-Pacific pipeline that flows towards China which will allow oil from Siberia to be pumped into the north of China.

Transneft vice president Michael Barkov said that his group would start construction of the oil pipeline this year so that it can be used from 2010.

Its loan from China would be used primarily to finance the pipeline, he added.—AFP