Russia rethinks China pipeline venture
Le-Min Lim and Eduard Gismatullin Bloomberg News Thursday, September 18, 2003
Possible Japan route is back on the table
The future of a $2.8 billion Siberia-to-China pipeline appears to be in doubt following the disclosure by the Chinese partner in the venture that the project has been delayed to allow President Vladimir Putin to consider a link to supply Japan instead.
.
Yukos Oil, Russia's biggest oil producer, agreed in May to supply 5.1 billion barrels over 25 years to China National Petroleum via pipeline to Daqing, in northeast China. But with second thoughts on the Russian side, the 2005 completion target appears unworkable.
.
"The Daqing route has definitely been delayed," Liu Hongbin, a director general of the Chinese company's publicly-traded unit, PetroChina, said this week. "Now, we have to see how Russia wants to proceed with this project," he added.
.
China wants oil from Russia, the world's biggest producer after Saudi Arabia, to cut its reliance on the Persian Gulf and to meet its soaring energy needs. Japan is competing with China for Russian oil, and offered to help pay the $5.8 billion cost of a pipeline to Russia's Pacific coast.
.
"There is simply not enough oil in eastern Siberia for two pipelines," said Pavel Kushnir, an analyst at United Financial Group brokerage in Moscow. "Japan's and China's interests in Russian oil collided in this case."
.
PetroChina's Hong Kong shares fell 3.9 percent Thursday to 2.45 Hong Kong dollars, or 31 U.S. cents, adding to a 2.9 percent decline Wednesday. Shares in Yukos fell 0.4 percent to 450.7 rubles, or $14.71 in afternoon trading in Moscow.
.
China and Russia have been discussing the 2,400-kilometer, or 1,500-mile, Daqing link since 1994. Transneft, the Russian oil pipeline monopoly, is lobbying for the project to pipe one million barrels of oil a day to the port of Nakhodka.
.
Competition for the pipeline project has sparked a diplomatic tug-of-war between Japan, which relies on imports for nearly all its oil, and China.
.
"The Pacific pipeline project is beneficial to both Russia and Japan," said Takayuki Iriya, an official in Japan's Ministry of Foreign Affairs. "For Russia, they can develop east Siberia and bring the region's crude oil to the Pacific. They can sell the oil in the Pacific region for the first time."
.
Japanese Prime Minister Junichiro Koizumi in May asked Putin to overturn the Russian Parliament's decision this year to send the oil to China. A month later, Chinese President Hu Jintao visited Moscow, signaling the importance Beijing places on improving ties with Russia, analysts said.
.
Lobbying by Japan has intensified since June when it lost an exclusive right to discuss development of the Azadegan field with the Iranian government. Tehran has since invited European and other Asian companies, including China Petrochemical, to take part in the $2.5 billion plan.
.
Japan's Agency of Natural Resources and Energy led a delegation to Russia in July to discuss the Pacific proposal, including offers of financial assistance to build the pipeline and develop Siberian oil fields, Tetsuro Yano, Japan's senior vice foreign minister, said.
.
"I have the impression that Japan-Russia cooperation is becoming more concrete," Yano said Wednesday, following a two-day visit to discuss the issue with a Russian presidential representative.
.
"It will be a loss of face for China if it falls through and may become a barrier for future collaboration," Eva Chu, a Hong Kong-based analyst with BNP Paribas Peregrine Securities, said. "The oil pipeline to Daqing would be a landmark agreement for both countries allowing for closer economic ties."
.
Prime Minister Mikhail Kasyanov is scheduled to China next week to discuss the pipeline and other trade issues.
.
Bloomberg News
< < Back to Start of Article Possible Japan route is back on the table
The future of a $2.8 billion Siberia-to-China pipeline appears to be in doubt following the disclosure by the Chinese partner in the venture that the project has been delayed to allow President Vladimir Putin to consider a link to supply Japan instead.
.
Yukos Oil, Russia's biggest oil producer, agreed in May to supply 5.1 billion barrels over 25 years to China National Petroleum via pipeline to Daqing, in northeast China. But with second thoughts on the Russian side, the 2005 completion target appears unworkable.
.
"The Daqing route has definitely been delayed," Liu Hongbin, a director general of the Chinese company's publicly-traded unit, PetroChina, said this week. "Now, we have to see how Russia wants to proceed with this project," he added.
.
China wants oil from Russia, the world's biggest producer after Saudi Arabia, to cut its reliance on the Persian Gulf and to meet its soaring energy needs. Japan is competing with China for Russian oil, and offered to help pay the $5.8 billion cost of a pipeline to Russia's Pacific coast.
.
"There is simply not enough oil in eastern Siberia for two pipelines," said Pavel Kushnir, an analyst at United Financial Group brokerage in Moscow. "Japan's and China's interests in Russian oil collided in this case."
.
PetroChina's Hong Kong shares fell 3.9 percent Thursday to 2.45 Hong Kong dollars, or 31 U.S. cents, adding to a 2.9 percent decline Wednesday. Shares in Yukos fell 0.4 percent to 450.7 rubles, or $14.71 in afternoon trading in Moscow.
.
China and Russia have been discussing the 2,400-kilometer, or 1,500-mile, Daqing link since 1994. Transneft, the Russian oil pipeline monopoly, is lobbying for the project to pipe one million barrels of oil a day to the port of Nakhodka.
.
Competition for the pipeline project has sparked a diplomatic tug-of-war between Japan, which relies on imports for nearly all its oil, and China.
.
"The Pacific pipeline project is beneficial to both Russia and Japan," said Takayuki Iriya, an official in Japan's Ministry of Foreign Affairs. "For Russia, they can develop east Siberia and bring the region's crude oil to the Pacific. They can sell the oil in the Pacific region for the first time."
.
Japanese Prime Minister Junichiro Koizumi in May asked Putin to overturn the Russian Parliament's decision this year to send the oil to China. A month later, Chinese President Hu Jintao visited Moscow, signaling the importance Beijing places on improving ties with Russia, analysts said.
.
Lobbying by Japan has intensified since June when it lost an exclusive right to discuss development of the Azadegan field with the Iranian government. Tehran has since invited European and other Asian companies, including China Petrochemical, to take part in the $2.5 billion plan.
.
Japan's Agency of Natural Resources and Energy led a delegation to Russia in July to discuss the Pacific proposal, including offers of financial assistance to build the pipeline and develop Siberian oil fields, Tetsuro Yano, Japan's senior vice foreign minister, said.
.
"I have the impression that Japan-Russia cooperation is becoming more concrete," Yano said Wednesday, following a two-day visit to discuss the issue with a Russian presidential representative.
.
"It will be a loss of face for China if it falls through and may become a barrier for future collaboration," Eva Chu, a Hong Kong-based analyst with BNP Paribas Peregrine Securities, said. "The oil pipeline to Daqing would be a landmark agreement for both countries allowing for closer economic ties."
.
Prime Minister Mikhail Kasyanov is scheduled to China next week to discuss the pipeline and other trade issues.
.
Bloomberg News Possible Japan route is back on the table
The future of a $2.8 billion Siberia-to-China pipeline appears to be in doubt following the disclosure by the Chinese partner in the venture that the project has been delayed to allow President Vladimir Putin to consider a link to supply Japan instead.
.
Yukos Oil, Russia's biggest oil producer, agreed in May to supply 5.1 billion barrels over 25 years to China National Petroleum via pipeline to Daqing, in northeast China. But with second thoughts on the Russian side, the 2005 completion target appears unworkable.
.
"The Daqing route has definitely been delayed," Liu Hongbin, a director general of the Chinese company's publicly-traded unit, PetroChina, said this week. "Now, we have to see how Russia wants to proceed with this project," he added.
.
China wants oil from Russia, the world's biggest producer after Saudi Arabia, to cut its reliance on the Persian Gulf and to meet its soaring energy needs. Japan is competing with China for Russian oil, and offered to help pay the $5.8 billion cost of a pipeline to Russia's Pacific coast.
.
"There is simply not enough oil in eastern Siberia for two pipelines," said Pavel Kushnir, an analyst at United Financial Group brokerage in Moscow. "Japan's and China's interests in Russian oil collided in this case."
.
PetroChina's Hong Kong shares fell 3.9 percent Thursday to 2.45 Hong Kong dollars, or 31 U.S. cents, adding to a 2.9 percent decline Wednesday. Shares in Yukos fell 0.4 percent to 450.7 rubles, or $14.71 in afternoon trading in Moscow.
.
China and Russia have been discussing the 2,400-kilometer, or 1,500-mile, Daqing link since 1994. Transneft, the Russian oil pipeline monopoly, is lobbying for the project to pipe one million barrels of oil a day to the port of Nakhodka.
.
Competition for the pipeline project has sparked a diplomatic tug-of-war between Japan, which relies on imports for nearly all its oil, and China.
.
"The Pacific pipeline project is beneficial to both Russia and Japan," said Takayuki Iriya, an official in Japan's Ministry of Foreign Affairs. "For Russia, they can develop east Siberia and bring the region's crude oil to the Pacific. They can sell the oil in the Pacific region for the first time."
.
Japanese Prime Minister Junichiro Koizumi in May asked Putin to overturn the Russian Parliament's decision this year to send the oil to China. A month later, Chinese President Hu Jintao visited Moscow, signaling the importance Beijing places on improving ties with Russia, analysts said.
.
Lobbying by Japan has intensified since June when it lost an exclusive right to discuss development of the Azadegan field with the Iranian government. Tehran has since invited European and other Asian companies, including China Petrochemical, to take part in the $2.5 billion plan.
.
Japan's Agency of Natural Resources and Energy led a delegation to Russia in July to discuss the Pacific proposal, including offers of financial assistance to build the pipeline and develop Siberian oil fields, Tetsuro Yano, Japan's senior vice foreign minister, said.
.
"I have the impression that Japan-Russia cooperation is becoming more concrete," Yano said Wednesday, following a two-day visit to discuss the issue with a Russian presidential representative.
.
"It will be a loss of face for China if it falls through and may become a barrier for future collaboration," Eva Chu, a Hong Kong-based analyst with BNP Paribas Peregrine Securities, said. "The oil pipeline to Daqing would be a landmark agreement for both countries allowing for closer economic ties."
.
Prime Minister Mikhail Kasyanov is scheduled to China next week to discuss the pipeline and other trade issues.
.
Bloomberg News Possible Japan route is back on the table
The future of a $2.8 billion Siberia-to-China pipeline appears to be in doubt following the disclosure by the Chinese partner in the venture that the project has been delayed to allow President Vladimir Putin to consider a link to supply Japan instead.
.
Yukos Oil, Russia's biggest oil producer, agreed in May to supply 5.1 billion barrels over 25 years to China National Petroleum via pipeline to Daqing, in northeast China. But with second thoughts on the Russian side, the 2005 completion target appears unworkable.
.
"The Daqing route has definitely been delayed," Liu Hongbin, a director general of the Chinese company's publicly-traded unit, PetroChina, said this week. "Now, we have to see how Russia wants to proceed with this project," he added.
.
China wants oil from Russia, the world's biggest producer after Saudi Arabia, to cut its reliance on the Persian Gulf and to meet its soaring energy needs. Japan is competing with China for Russian oil, and offered to help pay the $5.8 billion cost of a pipeline to Russia's Pacific coast.
.
"There is simply not enough oil in eastern Siberia for two pipelines," said Pavel Kushnir, an analyst at United Financial Group brokerage in Moscow. "Japan's and China's interests in Russian oil collided in this case."
.
PetroChina's Hong Kong shares fell 3.9 percent Thursday to 2.45 Hong Kong dollars, or 31 U.S. cents, adding to a 2.9 percent decline Wednesday. Shares in Yukos fell 0.4 percent to 450.7 rubles, or $14.71 in afternoon trading in Moscow.
.
China and Russia have been discussing the 2,400-kilometer, or 1,500-mile, Daqing link since 1994. Transneft, the Russian oil pipeline monopoly, is lobbying for the project to pipe one million barrels of oil a day to the port of Nakhodka.
.
Competition for the pipeline project has sparked a diplomatic tug-of-war between Japan, which relies on imports for nearly all its oil, and China.
.
"The Pacific pipeline project is beneficial to both Russia and Japan," said Takayuki Iriya, an official in Japan's Ministry of Foreign Affairs. "For Russia, they can develop east Siberia and bring the region's crude oil to the Pacific. They can sell the oil in the Pacific region for the first time."
.
Japanese Prime Minister Junichiro Koizumi in May asked Putin to overturn the Russian Parliament's decision this year to send the oil to China. A month later, Chinese President Hu Jintao visited Moscow, signaling the importance Beijing places on improving ties with Russia, analysts said.
.
Lobbying by Japan has intensified since June when it lost an exclusive right to discuss development of the Azadegan field with the Iranian government. Tehran has since invited European and other Asian companies, including China Petrochemical, to take part in the $2.5 billion plan.
.
Japan's Agency of Natural Resources and Energy led a delegation to Russia in July to discuss the Pacific proposal, including offers of financial assistance to build the pipeline and develop Siberian oil fields, Tetsuro Yano, Japan's senior vice foreign minister, said.
.
"I have the impression that Japan-Russia cooperation is becoming more concrete," Yano said Wednesday, following a two-day visit to discuss the issue with a Russian presidential representative.
.
"It will be a loss of face for China if it falls through and may become a barrier for future collaboration," Eva Chu, a Hong Kong-based analyst with BNP Paribas Peregrine Securities, said. "The oil pipeline to Daqing would be a landmark agreement for both countries allowing for closer economic ties."
.
Prime Minister Mikhail Kasyanov is scheduled to China next week to discuss the pipeline and other trade issues.
.
Bloomberg News
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