Posted on 10/20/2003 11:47:29 PM PDT by Destro
Tuesday, Oct. 21, 2003.
Putin Keeps China, Japan Guessing
By Dmitry Zhdannikov
Reuters BANGKOK, Thailand -- President Vladimir Putin kept the leaders of China and Japan guessing about the destination of Russia's first oil pipeline to Asia after meeting them on the sidelines of an Asian-Pacific summit.
Putin used the meetings with Chinese President Hu Jintao on Sunday and Japanese Prime Minister Junichiro Koizumi on Monday to say Russia was primarily interested in investment in its eastern Siberian regions, a senior Kremlin official said.
"Putin said the pipeline issue is very complex and is closely linked to the economic development and exploration of resources in eastern Siberia," Sergei Prikhodko, the deputy head of the presidential administration, told reporters.
"We have of course discussed the pipeline issue, but we need to understand too many things for ourselves before we go ahead with a final decision," Prikhodko said after Putin met Koizumi.
The leaders are in Bangkok for a summit of the 21-member Asia-Pacific Economic Cooperation forum.
Prikhodko said Prime Minister Mikhail Kasyanov, who visited Beijing last month, may go to Tokyo in December to update Japan on environmental studies of both routes, which are to pass near Lake Baikal.
Putin on Sunday called for APEC leaders to help develop giant reserves in eastern Siberia if they wanted Russia to build pipelines to the energy-hungry region and help it diversify away from supplies from the Middle East.
Russia's oil output is booming for the fifth straight year, but as oil reserves in western Siberia approach depletion, Russia wants to tap new regions, such as eastern Siberia.
Russia is producing 8.7 million barrels of oil per day, almost as much as the world's leading producer, Saudi Arabia, and wants to increase output to 10 million bpd to 12 million bpd by 2010.
The country's impressive economic growth relies heavily on oil and gas exports and it wants to build its first gas and oil pipelines to Asia before the end of the decade.
Both Japan and China, the world's second and third largest oil consumers, want to secure supplies as early as possible.
The Chinese pipeline project has long seemed to be more advanced. It is being designed by Yukos and has a smaller capacity and is less expensive than the Japanese route.
But the idea to build a costly link to the Pacific to supply Japan has advanced this year since Putin said he preferred this route as it would help speed up the development of some poorer regions in largely desolate eastern Siberia.
Russian officials say both China and Japan have offered billions of dollars to finance the links but they have made no firm commitment to eastern Siberia.
Prikhodko said Koizumi did not mention the Japanese financial offer. Tokyo was aware that both the Chinese and Japanese projects were awaiting final environmental approval, he said.
Yukos says the Chinese pipeline project of 600,000 bpd is already one year behind schedule and can only be built by 2006 or 2007 because of delays in government approval.
The pipeline to the Pacific Coast is designed to ship up to 1 million bpd by 2007 to 2009.
Analysts and government officials say Russia does not have enough reserves to justify building both pipelines and more exploration should be done in eastern Siberia.
Putin made an effort to calm the fears of China, which unlike Japan has firmly committed to buy oil from Yukos from 2005 to 2030, by saying oil supplies to the giant neighbor would increase even if the pipeline is not built.
"We are going to boost supplies to China under any route decision. This could be done by a direct link to China, by a stretch from the trunk pipeline running to the Pacific, or by rail," he said in a television interview Sunday.
That will come as a relief for Yukos, which says it needs special railroad tariffs to more than triple rail deliveries to China to 300,000 bpd in order to respect its contract with Beijing even if the pipeline is not built.
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