China has been working for nearly a decade to secure a $2.5 billion, 2,400km pipeline from Angarsk to the northeastern Chinese city of Daqing, but it is now facing a determined campaign from the Japanese to grab the Russian's favour.

Japan is pushing for a more expensive 4,000km route to the Russian Pacific port of Nakhodka, on the Sea of Japan, and has now offered to finance the entire $5 billion cost of constructing the Pacific pipeline and provide another $2 billion to develop further untapped oilfields in eastern Siberia.

Japan has also argued that the Nakodkha route would also be a strategic asset for Russia, allowing it to export to other Asian countries and perhaps the U.S. West Coast.

The cheaper and shorter Daqing pipeline would be far more profitable for the Russians as it only needs to transport 30 million tons of oil a year to be economic, while the longer Angarsk-Nakhodka pipeline would need to carry at least 50 million tons to be viable, a capacity that does not exist currently.

A final decision is expected by early 2004.