Transneft oversees a 48,610 km network of pipelines

The Nakhodka pipeline would pump Siberian oil from Angarsk, near Lake Baikal, over a 4,000 kilometre route to the sea of Japan.

Japan is keen to provide incentives for Russia to build the pipeline in preference to a rival project to pump oil to north eastern China.

"If Russia agrees that the Nakhodka route... is built before other options... we are ready to discuss possible cooperation to develop oil fields in eastern Siberia," said Jiro Okuyama, a spokesperson at Japan's Foreign Ministry.

The pipeline would help relieve Japan's reliance on the Middle East, from where it imports 88% of its energy resources.

China versus Japan

The negotiations were carried out during weekend talks in Vladivostock between the Japanese Foreign Minister, Yoriko Kawaguchi, and Russian Deputy Prime Minister Viktor Khristenko.

RUSSIAN PIPELINES Transneft oversees: 48,610 km of long-distance pipelines 336 oil refilling stations and 849 reservoirs transportation of 93% of oil produced in Russia 374 million tons of oil piped in 2002 Source: Transneft

Mr Khristenko said that demand for Asia-Pacific energy was expected to grow, but added costs had to be considered.

"The decision on building the pipeline to Nakhodka will be made after a full examination of the project which would include economic, technical and ecological aspects," Mr Khristenko told reporters.

Both Japan and China are pressing for their own, respective pipelines to be built first because of doubts that the construction of two pipelines would be viable.

Cost pressure

The cost of the Japanese pipeline is expected to be about $5bn (�3bn; 4.4bn euros), while the shorter Chinese pipeline would be about $2.5bn.

Transneft, the company that builds and maintains Russia's pipeline network, offered to build the pipeline by 2007-2009, but later said the project was too expensive.

Instead it lent support to plans by Russia's private oil company, Yukos, to build the shorter pipeline to China by 2005.

Japan plans to press its case for the Nakhodka pipeline with Russian Energy Minister Igor Yusufov at talks in Russia in early July.