Moscow is negotiating with Beijing over terms of a deal whereby Russia would sharply increase crude oil exports to China in exchange for borrowing as much as $30 billion, according to a report published Wednesday.

Kremlin-controlled OAO Rosneft, the nation’s dominant crude oil producer, is talking with China National Petroleum Corp. about possibly doubling its crude oil shipments for the loan, Reuters said, citing four anonymous sources.

Russia needs to borrow as much as $40 billion to conclude its $55 billion purchase of TNK-BP, the nation’s third-largest crude oil producers, and become the world’s largest listed crude oil producer.

It also needs billions more to develop massive reserves in its Arctic regions and fund a planned $25 billion refinery modernization program.

"It can be a combination of delivery options. The strategic line is to increase supplies to China," a source familiar with the talks told Reuters.

"The reason why China is willing to lend is simple. They sit on over 3 trillion of dollars in reserves and are looking to diversify their investments," the source added, referring to China's foreign exchange reserves of $3.3 trillion.

The deal, which has yet to be finalized, would resemble one agreed to in the last decade. At that time Rosneft and Russian pipeline monopoly Transneft agreed to build a pipeline to supply China with 300,000 barrels per day of oil for 15 years in exchange for a loan to help Rosneft pay for OAO Yukos, at the time the largest Russian oil company.

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