"The Daqing pipeline will be built first," Putin reportedly told the group. "But we will also build to Nakhodka."

The Russian government refused to comment on the report.

According to the newspaper, construction of the pipeline is to begin later this year, with the first stage capable of carrying 30 million metric tons of crude oil annually from the Siberian city of Taishet to Skovorodino near the Chinese border.

From there, the pipeline is expected to take two-thirds of the oil south to Daqing, while the remaining 10 million metric tons would be shipped by rail to a new port to be built on the Pacific coast near Nakhodka. The project is expected to be completed around 2008.

Putin also pledged to expand the line's capacity to 50 million metric tons a year, or roughly 1.2 million barrels per day, and to extend the line all the way to the Pacific coast at some time in the future, the Journal report said.

Putin reiterated Russia's plan to expand its oil production amid worries about global petroleum supplies. He played down the slowdown in output growth over the past year, noting that, despite problems at the embattled energy giant Yukos, Russian production has still been on the rise.

"Even without Yukos, oil production has increased and will continue to increase," Putin was quoted as saying.

[1]