China is the fastest growing energy consumer in the world, overtaking the U.S. in July of this year. Russia wants to secure its place as a prime energy supplier to this rapidly expanding economy, but faces stiff competition from other Central Asian countries already supplying gas to China.

This project might symbolize Russia’s new role in China’s downstream market, with Rosneft being the first company to make such a significant progress among Russian companies in dealing with Chinese partner in energy sphere according to Rosneft CEO, Eduard Khudainatov.

“It’s a precedent for a Russian company to join the Chinese market. And Rosneft is one of the first to do that as a result of years of work and today’s signing proves that. Mostly we’ll use our own oil for the project. As you know we have a successful project Vostok Energy in the Irkutsk region and we’re still conducting geological exploration. We have good prospects. But that won’t be the only source. We’ll use resources of Chinese companies involved in the project.”

Oil, gas, atomic energy and coal – Russia and China promote energy cooperation in every sphere. The two nations have already signed a deal for Russia to supply 9 million tonnes of crude annually through a spur on the Siberian Pacific Ocean pipeline, plus an agreement to buy oil from the Russian port Kozmino. At the end of this week the focus will be on political relations as President Medvedev heads to Beijing and Shanghai for a state visit.