AI
Monday, January 26, 2004 7:02:20 PM
This one pipeline has the potential to change the political and economic face of a significant part of the world. Think a burgeoning China starving for fuel.
-Am
China's hopes to get oil from Russia are on hold
Posted on Mon, Jan. 26, 2004
BY TIM JOHNSON
Knight Ridder Newspapers
BEIJING - (KRT) - China's hopes for bringing huge amounts of oil from Russia's Far East to its energy-thirsty populace may end up being a pipe dream.
A decade ago, China and Russia began studying the feasibility of building a large oil pipeline from Anagarsk in Russia to Daqing in northeast China.
The project received high-level support in Beijing and Moscow and looked like it might cement a new energy relationship between the two wary neighbors. Few people live in Russia's Far East, while China has a huge population.
But a combination of Japanese "dollar diplomacy" and the sudden jailing last fall of a Russian oil tycoon has put the project on hold, perhaps permanently.
Just eight months ago, China's state oil company and a Russian counterpart, Yukos, signed an agreement for oil sales, contingent on the building of the 600,000 barrel-per-day pipeline.
Since then, however, Japan has offered Russia a counterproposal. It calls for an even larger pipeline to be built from Siberia to the Pacific coast port of Nakhodka, skirting China entirely, but giving Russia access to markets in Japan, South Korea and elsewhere in East Asia.
To sweeten the deal, Japan said it would finance the project with a $7.5 billion loan. It also held out the prospect of development funds for Russia's Far East.
"The Japanese can practice `money diplomacy.' They are richer. They can throw money at the Russians," said a Chinese government oil analyst, speaking on condition of anonymity.
To complicate matters, Russian President Vladimir Putin jailed the president of Yukos, Mikhail Khodorkovsky, last October, charging him with tax evasion and fraud.
Since then, Russia and China have been silent on the pipeline's prospects.
"This signals a rethinking of the Russian-Chinese strategic relationship," said Ilan Berman, vice president of the American Foreign Policy Council, a Washington policy group. Berman said Putin might have grown wary because he believes "China is rising and that China will inevitably become a strategic competitor."
China is still waiting for a definite answer from the Kremlin.
"The deadline is always postponed. I think the Russians don't want to make China unhappy," the Chinese analyst said.
---
© 2004, Knight Ridder/Tribune Information Services.
http://www.kansascity.com/mld/kansascity/news/world/7801207.htm
-Am
China's hopes to get oil from Russia are on hold
Posted on Mon, Jan. 26, 2004
BY TIM JOHNSON
Knight Ridder Newspapers
BEIJING - (KRT) - China's hopes for bringing huge amounts of oil from Russia's Far East to its energy-thirsty populace may end up being a pipe dream.
A decade ago, China and Russia began studying the feasibility of building a large oil pipeline from Anagarsk in Russia to Daqing in northeast China.
The project received high-level support in Beijing and Moscow and looked like it might cement a new energy relationship between the two wary neighbors. Few people live in Russia's Far East, while China has a huge population.
But a combination of Japanese "dollar diplomacy" and the sudden jailing last fall of a Russian oil tycoon has put the project on hold, perhaps permanently.
Just eight months ago, China's state oil company and a Russian counterpart, Yukos, signed an agreement for oil sales, contingent on the building of the 600,000 barrel-per-day pipeline.
Since then, however, Japan has offered Russia a counterproposal. It calls for an even larger pipeline to be built from Siberia to the Pacific coast port of Nakhodka, skirting China entirely, but giving Russia access to markets in Japan, South Korea and elsewhere in East Asia.
To sweeten the deal, Japan said it would finance the project with a $7.5 billion loan. It also held out the prospect of development funds for Russia's Far East.
"The Japanese can practice `money diplomacy.' They are richer. They can throw money at the Russians," said a Chinese government oil analyst, speaking on condition of anonymity.
To complicate matters, Russian President Vladimir Putin jailed the president of Yukos, Mikhail Khodorkovsky, last October, charging him with tax evasion and fraud.
Since then, Russia and China have been silent on the pipeline's prospects.
"This signals a rethinking of the Russian-Chinese strategic relationship," said Ilan Berman, vice president of the American Foreign Policy Council, a Washington policy group. Berman said Putin might have grown wary because he believes "China is rising and that China will inevitably become a strategic competitor."
China is still waiting for a definite answer from the Kremlin.
"The deadline is always postponed. I think the Russians don't want to make China unhappy," the Chinese analyst said.
---
© 2004, Knight Ridder/Tribune Information Services.
http://www.kansascity.com/mld/kansascity/news/world/7801207.htm
Discover What Traders Are Watching
Explore small cap ideas before they hit the headlines.
