Russia studies Chinese proposal to take oil through Mongolia

Jan 13, 2003 01:00 AM

An agreement by Russia and Japan to examine a mooted Siberian oil pipeline to the Pacific coast takes the project a step closer to realisation, but Russia is also eyeing a rival project that would transport the oil south to China.
A Russia-Japan "action plan" signed by President Vladimir Putin and Prime Minister Junichiro Koizumi commits the two sides to further research into the 5 bn $ 4,000 km (2,500-mile) crude oil pipeline between eastern Siberia and Russia's east coast. The pipeline running between Angarsk, west of Lake Baikal, via Khabarovsk to Nakhodka on the Sea of Japan would provide the first major outlet for Russian energy production to the east Asian market and eventually to the US west coast.
Putin and Koizumi agreed to "step up cooperation in the energy sector," notably with a view to "exploiting energy resources in Siberia and Russia's Far East and constructing oil and gas pipelines to transport them" to southeast Asia.

Japanese officials admitted that Tokyo had a major interest in the trans-Russian pipeline and was "looking into being involved in the project," but noted that Russia was also examining a Chinese proposal to take the oil south through Mongolia. The Angarsk-Nakhodka project, "if carried out, would enable Japan to reduce its dependence on Middle East oil supplies by 10 %," an unnamed official said. However the so-called "Chinese project", being considerably shorter, would be much cheaper "and its feasibility should be thoroughly studied," the official said.
Japanese delegation spokesman Jiro Okoyama told that Russia's choice depended on the results of economic feasibility studies. Experts believe that to be viable the Pacific route would require a throughput of 1 mm bpd of oil. By contrast, the Chinese route becomes viable with just 600,000 bpd.

The Pacific project would enable Japan and the United States to purchase substantial quantities of Russian oil, hence reducing their dependence on Middle East producers, whereas in the latter case "only China would get to use it," Okoyama said.
Japanese sources said that Japanese delegates had made proposals to their Russian counterparts regarding the volumes of oil they would be prepared to buy and how much they might invest in the trans-Russian pipeline.

Source: Jang Group of Newspapers
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