On Friday, the Russian Government announced its decision to build the pipeline that will eventually stretch towards Japan, with a separate branch reaching China's Daqing.

The decision is widely viewed as a compromise made by the Kremlin to please both Japan and China, which have lobbied hard in recent months to secure access to the same reserve of Russian oil through rival trunk lines.

"The result is not bad for China," said an industrial insider, who has been closely monitoring the project for years. "We have taken the first step in securing the Russian oil, although there is still a great deal of details that need to be hammered out."

Another industrial official, who declined to be named, said: "We will get what we originally wanted. It is their business if they want to extend the line to Japan."

China and Russia have been studying plans for the US$1.7 billion Sino-Russian oil line since 1994. According to the original design, the 2,400-kilometer pipeline is expected to deliver 20 million tons of oil annually from Angarsk in the Irkutsk region to Daqing from 2005. The amount will rise to 30 million tons by 2010.

Talks on the project were suspended last December after Russia's pipeline monopoly Transneft tabled a new proposal to transport the Angarsk oil to its Far East port city Nakhodka. The route is about 60 percent longer and two times more expensive than the Angarsk-Daqing project.

The industrial official said the new proposal included minor changes deviating from China's original plan, to reflect Russia's new decision.

"There are no technical difficulties brought about by the changes."

But uncertainties still surround the project, heightened by the Russian Government's announcement that further changes may still be made if the project is not found to be economically feasible.

(China Daily March 18, 2003)