The agreement also benefits China, which before the crisis had entered energy negotiations at a disadvantage. Russia will provide China 300,000 barrels of crude oil daily, which is about 4 percent of China's total oil demand and 8 percent of China's total oil imports. In addition, Russia will pay 6 percent interest on the loan, meaning the oil will end up costing China about $20 per barrel.

In the long term, the package agreement-including the agreement to build a branch oil pipeline heading to China-will be important to both sides for realizing their energy strategies. Russia said in its energy strategic blueprint that cross-border oil transportation was of special importance to the country. Russia can only cement its position in the international energy market through stable and reliable oil exports, free from political and other influences. As the second biggest oil exporter in the world, Russia must reduce its reliance on the European market and find another stable market for its oil reserves in Eastern Siberia, so as to build a diversified oil exportation network. China is now the world's second biggest oil importer. With the development of industrialization and urbanization, it also needs to find a stable supplier outside the Middle East and Africa to ensure its energy security.

Before the financial crisis emerged, Russia took strict control of Chinese investment in its energy industry, which influenced the relationship between Russia and Chinese energy companies. The package agreement includes projects for joint oil processing and sales. The cooperation reflects the high-level political mutual trust between the two governments and proves their confidence in coping with the crisis hand in hand. The breakthrough in energy cooperation will deepen their friendship, all-round cooperation and strategic cooperative partnership, as well as promote bilateral trade and broaden economic cooperation.

The package agreement also covers nuclear energy, power and mineral exploitation. Energy cooperation in wider fields is becoming more important for bilateral trade and economic cooperation in the context of the financial crisis.

Trade volume between the two countries increased 18 percent over 2007, although the growth rate decreased. The bilateral trade growth rate in 2007 was 44 percent. In the third and fourth quarters of 2008, bilateral trade saw negative growth. That trend continued in January, as bilateral trade volume decreased 42 percent over the same period last year. Under such serious circumstances, the package agreement will help the two countries increase trade volume and deepen their cooperation. Russia required that energy cooperation cover more fields, such as nuclear energy, power and mineral exploitation, and even suggested joining in China's airplane production. The package cooperation illustrates Russia's new energy diplomatic strategy of gaining maximum benefit from bilateral energy cooperation.

Considering China's insatiable demand for energy, fluctuating world energy prices and the unstable geopolitical situation, it is possible that obstacles will arise as the two countries implement the "loan-for-oil" agreement over the next 20 years. In addition, past cooperation between the two countries has been sabotaged by Russian energy interest groups. Therefore, the two countries should be prepared for the risks of implementing the package agreement. When the global economy recovers, oil prices rise or the Russian economy revives, can the two countries continue their mutual benefit and reciprocity?

As their strategic cooperation deepens, the two sides have established many communicative mechanisms like an energy dialogue and regular meetings between senior leaders. After the financial crisis ends, the world financial system and economic structure will change, and China and Russia will find they have more interests in common. Therefore, it is unlikely that sudden changes will disrupt implementation of the agreement.

The package agreement marks a significant achievement in bilateral energy cooperation. It was the first time that China and Russia signed a 20-year oil supply contract, as well as the first time the two sides combined a loan contract, pipeline contract and oil supply contract in a package agreement. The package mode also guarantees their cooperation from another angle by encouraging mutual benefit and reciprocity.