Russia Plans Gas Line to Feed China

Russian President Vladimir Putin, left, and Chinese President Hu Jintao agree to expand their ties in the energy sector.
Russian President Vladimir Putin, left, and Chinese President Hu Jintao agree to expand their ties in the energy sector. (By Guang Niu -- Getty Images)
By Peter S. Goodman and Edward Cody
Washington Post Foreign Service
Wednesday, March 22, 2006

BEIJING, March 21 -- Russia on Tuesday promised to send China significant shipments of energy to fuel its ceaseless development, pledging to erect a pipeline that will deliver natural gas from Siberia within the next five years.

The announcement came during a two-day trip to China by Russian President Vladimir Putin as he visits his Chinese counterpart, Hu Jintao. The mission is designed to showcase deepening political, military and economic relations between the former Cold War superpower adversaries.

However, the news omitted mention of a project at the center of Beijing's energy objectives -- another pipeline that would bring crude oil from fields in Siberia.

Nearly three years ago, China declared it had that project in hand, announcing the signing of a $150 billion deal with Russia. The venture was to be a linchpin in Beijing's aim to diversify its imports away from the volatile Middle East, the source of more than half of China's overseas purchases. The 2,500-mile Russian oil pipeline was to supply as much as one-third of China's imports by 2030.

But in the years since, complications have plagued the deal, and China's regional rival, Japan, has appeared to seize the project. Tokyo has pledged at least $6 billion toward the expansion of Russia's oil fields and the development of the pipeline if Russia would run it to the Pacific port of Nakhodka, where Japanese tankers could come and carry much of it away.

Russian officials have sent confusing signals about the ultimate fate of the oil project in recent months. Beijing has sought to persuade Moscow to at least build a spur that would carry some oil south into China.

On Tuesday, Russia's minister of industry and energy, Viktor Khristenko, added to the uncertainty, saying his government will conduct a project feasibility study and only then decide how and when to proceed.

"There can be no talk of 'when' until a feasibility study is completed," he told reporters.

Meanwhile, Japan's vice trade minister, Hideji Sugiyama, said Tuesday that Putin had given assurances during recent talks in Moscow that the oil pipeline eventually would be built to the Pacific coast, Bloomberg News reported.

[Putin said Wednesday that there is "no doubt" that a pipeline carrying oil from Siberia to China will be built, but he offered no details on the routing or the timing, Bloomberg reported. Analysts have questioned whether enough oil exists in Siberian fields to satisfy both Japanese and Chinese demands, so the issue of what gets built first is key.]

Whatever the fate of the oil pipeline, Russia said it would give China some relief from energy shortages with the gas project. Putin said the planned pipeline would supply as much as 2.8 trillion cubic feet of gas per year, though he did not specify a route or cost. Russia's Interfax news agency pegged the cost at about $10 billion, citing an unnamed official in the Russian delegation.

Officials with Russia's state-owned gas company, OAO Gazprom, said the two countries would join forces on the project. "We are talking about not only gas deliveries but joint activities in exploration and production," said the company's chief executive, Alexei Miller.

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