'The contract in current market parameters is absolutely unprecedented', Putin told investors at the annual Saint Petersburg International Economic Forum.
Few details were given but the oil will be produced and transported through Siberia and the Russian Far East to reach China. Picture: Rosneft's headquarters in Moscow, Russia, courtesy Rosneft.ru
The deal is one of the biggest in oil history. It was signed by Rosneft chief executive Igor Sechin and CNPC head Zhou Jiping in the presence of Putin and visiting Chinese Vice Premier Zhang Gaoli. Oil for the new deal with be supplied via Siberia and the Russian Far East. The deal marks an eastward shift in Russian economic priorities.
'Consumption will be growing in China. And in Japan consumption will be growing, too', said the Russian president, adding: 'Europe is going through some certain difficulties'.
Over a quarter of a century, the deal sees the delivery of some 360 million tonnes of oil to China, said Sechin.
Currently four-fifths of Russian oil flows westwards but this is now changing.
Andrew Neff, an analyst at IHS Global Insight, said of the deal: 'It shows the clear determination from Russia to shift exports from Europe to Asia'.
The mammoth agreement was presaged in the March visit to Moscow of Chinese President Xi Jinping. Rosneft is expected to receive an initial upfront cash payment of $70 billion.
'It's a landmark deal,' said Karen Kostanian, an oil and gas analyst at Bank of AmericaMerrill Lynch in Moscow, cited by AFP.
It would allow Rosneft to develop new fields in eastern Siberia.
International news agency Reuters hailed it as 'a tectonic shift in Russian oil flows away from Europe'.
Separately, CNPC will purchase 20 percent in the Russian Arctic project known as the Yamal LNG in which France's Total has 20 percent and Novatek holds the rest. Reports predicted a huge gas deal in the future to match this mega-oil contract.
New cities and industries could be created from construction of high-speed railway and motorway routes spanning whole of country.
Customs procedures and rules on foreigners staying in duty-free region will be relaxed in move that will bolster the economy and boost trade from 2016.
Possible route could see 400km/hour bullet train pass through heart of Siberia and Altai region with stops in major cities.
Memorandum of understanding will see construction of major projects including new refinery and upgrade to port.
Ambitious plans unveiled for 250km/h train that would cut travel times and drive new business and tourism between two countries.