Russian oil giant Rosneft and China National Petroleum Corp have signed a US$270 billion deal that will supply China with oil for 25 years.

The agreement was hailed by Russian President Vladimir Putin as marking a new era of energy cooperation.

It was signed by Rosneft chief executive Igor Sechin and CNPC head Zhou Jiping in the presence of Putin and visiting Chinese Vice Premier Zhang Gaoli at the annual Saint Petersburg International Economic Forum yesterday.

"Essentially, this is a new era of cooperation which means that in our cooperation with our strategic partners we shift from purely raw supplies to full-fledged cooperation in the engineering and manufacturing sphere," Putin said.

Rosneft will supply China with 300,000 barrels per day over 25 years starting in the second half of the decade, on top of the 300,000 bpd it already ships to the world's largest energy consumer.

"The estimated value of the deal is US$270 billion," Rosneft's boss Igor Sechin told reporters. It would be one of the biggest supply deals in Russia's history. The country is the world's top oil producer.

Putin later said total supplies could amount to as much as 900,000 bpd.

Colossal potential

Russia wants to diversify its base of energy customers away from crisis-hit Europe and is aware it has not fully exploited the colossal potential of the Chinese market.

The initial agreement was agreed during a visit to Moscow in March by Chinese President Xi Jinping. That agreement pledged to gradually triple the supply of Russian oil to China over the next 25 years from the current level of 15 million tons per year.

The oil will be delivered to China from the existing Eastern Siberia-Pacific Ocean oil pipeline, pumping oil directly to the Chinese region of Mohe.

Among a host of other energy agreements signed in Saint Petersburg yesterday, CNPC and Russian independent gas producer Novatek signed a deal to send Russian liquified natural gas (LNG) to China.

Under the deal, CNPC will purchase 20 percent in the Russian Arctic project known as the Yamal LNG in which France's Total has 20 percent and Novatek holds the rest. The project is scheduled to produce gas in 2016.

Russia is also working to finalize a potentially huge gas deal with China but a commercial contract has so far proved elusive as talks have become mired in pricing disputes.