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To: TobagoJack who wrote (27253)	1/10/2003 5:07:03 AM
From: elmatador	Respond to of 74559

Russia and Japan set to back $5bn pipeline deal By Quentin Peel in London and Andrew Jack in Moscow Published: January 9 2003 21:58 \| Last Updated: January 9 2003 21:58 <<The most obvious thing is done at last!!>> Vladimir Putin, the Russian president, and Junichiro Koizumi, the Japanese prime minister, are expected to announce in Moscow on Thursday an agreement to co-operate on a 4,000km pipeline to export oil from Siberia to the Far East. The $5bn venture would provide the first major outlet for Russian energy production to the east Asian market and eventually to the US west coast. This would help reduce the reliance of east Asia - and perhaps the US - on Middle East producers. Japan views the pipeline as being of great strategic importance to its long-term energy supplies, with planned capacity of 1m barrels a day - nearly a quarter of current imports. A final decision will depend on calculations of the economic viability of the Pacific Pipeline Project, which would run from Angarsk, west of Lake Baikal, via Khabarovsk to Nakhodka on the Sea of Japan. The Russian government must also decide between the project - planned by Russian state-controlled Transneft - and a rival scheme by Russian oil group Yukos to supply eastern Siberian oil to China. The Transneft scheme, which would be built on Russian territory, is believed to be preferred by Moscow. It is likely to be favoured by the US as it will open Russian oil supplies to a wider market than China. "The Japanese government is very serious about realising this project," Hirofumi Katase, director of petroleum and natural gas at Japan's economy ministry said in Moscow on Thursday. "Japan would also welcome US participation." Ian Bremmer, president of the Eurasia group, a political risk consultant that has been involved in liaising with Washington, said: "This would suit US policy. The driving force behind the US-Russia partnership is the desire to diversify supply of oil away from the Middle East." The US has begun to purchase small quantities of Russian oil over recent months. These have been seen as proof of Washington's willingness to increase its number of oil sources. Japanese officials say if the project is shown to be economically viable "Japan will provide finance". The Japan Bank for International Co-operation and NEXI, the Japanese export insurance agency, have been involved in discussions, they said. But the rival plans will battle for Kremlin backing. "We are committed to pursuing the China pipeline," said Yukos. "This changes nothing in our plans. The project is on schedule." The Yukos scheme is for a $1.8bn, 2,400km pipeline from eastern Siberia to Daqing in Manchuria. The company, the biggest eastern Siberian producer, has agreements for long-term contracts to supply 20m tonnes of oil a year to China by 2005 and 30m tonnes from 2010 until 2030.