Tokyo is probable winner of Russian oil pipeline contract


Mon, Dec 22, 2003 - Page 12

Tokyo's chances for winning a bid to build an oil pipeline across Russia to Japan were looking favorable in the wake of a visit here by the Russian prime minister this week although Moscow had not ruled out a bid by rival China.

Moscow said Tuesday it would continue to consider the Japanese proposal, with an agreement to this effect clinched during talks in Tokyo between Russian Prime Minister Mikhail Kasyanov and his Japanese counterpart Junichiro Koizumi.

On Thursday, the governor of the Russian Far East region of Primorsky Kray, which would welcome a Japanese pipeline's terminus in his region's port of Nakhodka, said he was convinced Tokyo's plan would be realized.

During his three-day visit which ended Wednesday, Kasyanov and Koizumi said the Japan-backed pipeline ending on Russia's Pacific coast would be strategically important for the development of Far Eastern Russia, and for the supply of oil to the entire Asia-Pacific region.

"They positively reviewed progress in on-going consultations between specialists [on the Pacific project] and expressed their intention to actively continue the consultations," a joint statement said.

Tokyo hopes that Moscow builds a 4,000km pipeline from oilfields in eastern Siberia to the port of Nakhodka, facing Japan.

But the project faces intense competition from Beijing, which has tried for nearly 10 years to convince Moscow to build a 2,400km pipeline at a cost of US$2.5 billion, from the Siberian city of Angarsk to Daqing, in northeast China.

Japan proposes, according to the Russians, to cover the total cost of construction for its proposal, estimated at US$5 billion, while adding another two billion dollars to finance the development of new oilfields in eastern Siberia to make the longer, costlier route economically viable.

On Monday evening, the Russian prime minister even inquired about private Japanese investment for the development of oilfields in the region during a meeting with Japanese Foreign Minister Yoriko Kawaguchi.

"I would really like to have the opinion of private-sector Japanese companies who could be potential partners," Kasyanov told Kawaguchi, according to a Japanese briefer.

Without excluding the Chinese option, and calling the two routes "complementary," the governor of Primorsky Kray, Sergei Darkin, portrayed the Japanese route, which would greatly benefit his region, as a done deal.

"The prime minister of Russia has indicated a decision to build a Pacific pipeline in the direction of Nakhodka as something that is ... a certainty," Darkin told reporters here in Russian during a visit.

He went as far as suggesting that Japanese trading house Sumitomo Corp could be one of the possible partners who help build the pipeline.

"I am deeply convinced that the project has started and I think that in the six months to come we will see a concrete action plan by both Russia and its international partners," he said.