Russia prioritizes China over Japan for oil
(Kyodo)
Updated: 2005-07-10 09:39

Russian President Vladimir Putin said his country will prioritize China over Japan as the recipient of oil supplies from a pipeline project linking eastern Siberia with the Russian Far East, Japan's Kyodo news agency reported yesterday.

Putin made the remarks during a news conference after the three-day summit of the Group of Eight powers in Gleneagles, Scotland.

Both Japan and China have tried to convince Russia to favor it in planning the pipeline's route. Russia had at one point last year agreed to build a 4180-km pipeline from Taishet near Lake Baikal to Nakhodka on Russia's Sea of Japan coast, Japan's preferred route. Tokyo has offered to extend some $12 billion to help finance the project.

China, which had initially inked the deal for a pipeline from the Siberian oil fields to Daqing, later offered Moscow more than $13 billion, Kyodo said.

In April, Moscow issued an order for the pipeline to be built from Taishet to the halfway point at Skovorodino near the Russian-China border, triggering worries in Tokyo that oil supplies would go to China first.

Putin made it plain this time that the construction of the Pacific-bound pipeline will be contingent on development of a new oil field in eastern Siberia -- where the amount of oil deposits remains unconfirmed.

He said the three-year first phase of the project will be launched as early as this year, with 20 million tons of oil supplied to China a year and another 10 million tons transported to the Pacific by train.

Japan has told Russia it may not offer financing for the pipeline project if the prospect of Russian oil reaching the Sea of Japan coast diminishes.

Kyodo quote Japanese observers as saying Putin's remarks indicate that the Japanese government's strategy to build up bilateral ties with Russia through the pipeline project in the hope of finding a way to make progress with the ongoing territorial row have been dashed with the latest developments.

When complete, the pipeline is expected to funnel 80 million tons of oil a year.

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