|
Russia goes to the sea with Siberian pipeline China sought exclusive, but Japan lobbied for port alternative Allen Baker Petroleum News Contributing Writer
Despite heavy lobbying from China, the Russian government has picked a pipeline route that will take oil from eastern Siberia to the ocean, where it can be exported to Japan and other countries.
The decision to choose that alternative over a cheaper line to China alone came Dec. 31.
The pipeline will end at the port of Nakhodka, on the Sea of Japan about 110 miles from Vladivostok. Nakhodka, with a population of 225,000, has been gaining as a major Far East port because it has fewer ice problems than Vladivostok. The oil will enter the 2,600-mile pipeline at Taishet in eastern Siberia.
The 1.6-million-barrel-per-day line will be built by OAO Transneft, a state-owned firm. Construction is expected to take three to six years.
Cost estimates are all over the map, from around $11 billion to $16 billion or more. A detailed project plan is expected by May, with better numbers.
As part of its lobbying for the pipeline to come to the Pacific, Japanese officials offered to help with financing for the huge project. Japan wants to reduce its dependence on the Middle East, which now provides 85 percent of the country’s oil. Yukos stake for China Meanwhile, Russian officials also said that the Yukos unit auctioned off earlier in December would not go to giant Gazprom along with state-owned Rosneft. Instead, Yuganskneftegaz will be spun off as a separate government-controlled oil company.
The Gazprom-Rosneft merger will go ahead later this month, with the share swap giving Russia’s government majority control of Gazprom.
Industry and Energy Minister Viktor Khristenko also said Dec. 30 that state-owned China National Petroleum Corp. could purchase up to 20 percent of the old Yuganskneftegaz. That division, the former core of Yukos, holds 17 percent of Russia’s oil reserves and produces around a million barrels a day.
It was purchased by a front company for $9.6 billion, with that company later revealing it was controlled by Rosneft. Just where the $9.6 billion will come from isn’t clear. The government could provide the funds directly, given all the political heat it has taken already over the Yukos saga.
China’s national oil companies have been out shopping the world for new reserves, recently signing major agreements with Iran and with partners of the North West Shelf venture that holds huge natural gas reserves off Australia. But Western companies already have tied up the best prospects, and China is bidding against fellow rising power India, which also wants to ensure its energy supplies. China’s rising demand China, now the world’s second-largest oil consumer, imports 2.5 million barrels a day while producing 3.5 million barrels daily. Its thirst for oil has been increasing dramatically. A deal for nearby Siberian reserves would likely be welcome.
China had been hoping the Siberian pipeline would go to its aging petroleum center at Daqing, where it could be distributed to Chinese refineries. That route would have been much shorter and cheaper, but it would have left the Russian exporters with just one market, rather than an opening to tanker shipments around the Pacific Rim. And Yukos officials had pushed that alternative, which didn’t help its chances in the political arena.
Russia is trying to beef up its export pipeline system to boost its role as a major oil supplier for the world. The nation currently exports around 7 million barrels a day, most of it through its pipeline network, and consumes about 2.5 million internally. The nation expects to more than double its pipeline exports by 2020.
| 