China recently lost a crucial energy battle to Japan. The Russian government announced the construction of a "system of pipelines' from its Siberian oilfields to the Pacific Ocean opposite Japan. Both Japan and China wanted the pipeline to be routed through their lands. But Russia decided in favour of Japan following talks with Tokyo, which committed to finance the construction.

The pipeline will start from Taishet in Siberia to Perevoznaya near Vladivostok and the eastern port of Nakhodka. It's annual capacity will be 80 million tonnes. Although Russia has not mentioned the cost of its construction, earlier estimates put it at nearly us $16 billion. The Chinese option would have cost about seven times less but by using the Pacific route, Russia can also supply oil to other countries like South Korea and even the west coast of the us. D uring discussions with China, the two sides could not agree on the route as well as certain environmental issues.