China imports just 25,000 barrels per day (bpd) direct from Russia, as Soviet-era pipelines are geared to Europe. With 1.2 billion people, it will consume 11 million bpd in 2020 up from 4.4 million bpd in 2000, says the International Energy Agency. Mr Kukes and his colleagues in the Russian energy sector are hoping the new cooperation between the giant neighbors will translate into projects to supply China with oil and gas.
To get crude oil and gas from Siberia to China, another Russian company, Gazprom, is negotiating participation in a planned East-West pipeline inside China, which opens up the possibility of Russian access to new energy markets - not only in China but also in the Asia-Pacific region.
Mr Jiang and Mr Putin signed a 20-year agreement on economic and military co-operation, likely to lead to closer links in the energy sector. Much of Russia's energy may flow east. Several projects are under discussion. One is a $11 billion project to develop the 30 billion cubic metres (bcm) Kovykta gasfields and make shipments to Beijing via a new 4,000-kilometre pipeline. The project unites British Petroleum (BP) with Russia's Tyumen Oil Company, Interros and others. Gazprom is backing a rival $15 billion pipeline from its Yamal-Nenets fields, while Yukos wants a $1.7 billion, 600,000 barrels per day (bpd) oil link from Angarsk to Beijing.
A Nomura analyst, Charles Saunders, said that the Chinese plans make sense.
"Russian oil and gas companies can use increasing demand in Europe over the next few years to leverage themselves to take advantage of the tremendous growth in Asia after that.''
But Russia's road to Chinese markets will be fraught with hurdles. Anyone spending billions of dollars on building huge pipelines will want to know who exactly will buy at what price. Already, Russia and China are haggling over prices for the oil to be shipped via the Yukos link. Pipelines must traverse large areas of China to reach demand areas. A recent Chinese gas find near the Russian border has further complicated matters. However, analysts have noted that the Chinese are using their huge potential demand to bargain and get lower things are likely to start moving when the bargaining is over. No other steady energy sources are on the horizon for China. A planned $20 billion link from Kazakhstan to China is costly and will run through Xinjiang - an area of ethnic unrest involving the Muslim minority Uighur community.
The question of financing remains, but the parties may seek the help of Western oil companies anxious to tap the Chinese market. Tyumen's Mr Kukes said: "We cannot do [the Kovykta project] ourselves and look to BP to take the lead."
