Foreign Correspondence

[Amaunet]

Russia oil move irks Chinese

There are also the fears, particularly in Russia's sparsely-populated far east, about China's perceived threat to the region.

The Kremlin has growing concerns that China's booming economy and the ongoing demand for energy sources and raw materials -- coupled with its huge population -- will tempt China to infiltrate the mineral-rich Russian Far East and annex the area.

Moscow hopes to draw investment into the region from Japan and South Korea so that those countries have a vested interest in protecting Russia's territorial integrity.

Japan is reported to have offered big financial incentives and the prospect of significant energy co-operation with Russia.

According to Strategic Forecasting Inc., the region is becoming a nexus of geopolitical tension for the countries of East Asia, particularly Russia, China and Japan. This tension could lead to China taking a preemptive action against Russia.

Also note China will have equal access to buy oil in the area close to the port of Nakhodka.

And Kazakhstan is expecting to start building an oil pipeline to China later this year, the head of the country's national oil company has said. -Am


By Hamish McDonald
China Correspondent
Beijing
February 25, 2004

Chinese oil industry officials are refusing to believe that Russia has rejected their plan to pipe oil from Siberia into their booming economy, opting instead on a Japanese plan for a pipeline to the Pacific coast.

A decision announced by Russian Energy Minister Igor Yusufov on Saturday is reverberating around East Asia as Japan looks to have won the bidding for Siberian oil from the huge Angarsk oilfield.

Mr Yusufov said the Russian Government wanted the state-run Transneft to build a 3900-kilometre crude oil pipeline to the Pacific coast near the port of Nakhodka for export to Japan, the US and other customers in the Pacific. Japan has offered $US7 billion ($A9 billion) in finance.

A rival proposal backed by Russia's biggest oil company, Yukos Oil, to build a shorter $US2.8 billion pipeline to China's north-east oil centre of Daqing and give China exclusive access to the oil could be abandoned, he said, adding: "China will have equal access to buy oil in the area close to the port of Nakhodka."

Mr Yusufov's justification that the decision for the Pacific route was based on purely economic terms will only enrage the Chinese further. The deal will be seen here as Russia's old communist ally being outbid by the still-hated wartime enemy Japan.

The ill feeling is likely to be reflected in firming Chinese economic decisions to "punish" Japan. These include the imminent decision on technology for a Beijing-Shanghai very fast train, likely to be decided in favour of France's Alsthom; and the location of a multinational experimental fusion energy reactor in France rather than Japan.

For now, China is hoping political pressure can still be brought to bear on Moscow. "It is not the final decision by the Putin Government," an official with the China National Petroleum Corp, the Chinese company backing the project, was quoted as saying yesterday. He said there was still room for Beijing to lobby the Kremlin to build the Angarsk-Daqing proposal.

A non-binding agreement signed a year ago envisaged China shipping 700 million tonnes of Russian crude through the pipeline over 25 years; a $US150 billion flow that would enormously lighten China's growing dependence on sea-carried oil from the Middle East, Africa and South-East Asia.

If the Russians finally decide to bypass China, Chinese experts would not rule out the possibility that Russia may build a spur on the trunkline to transport some of the crude to Daqing.

http://www.theage.com.au/articles/2004/02/24/1077594823819.html


China fears over Siberia pipeline

By Francis Markus
BBC correspondent in Shanghai

China needs oil to fuel its economic boom

Beijing is concerned Russia may be deciding against a $2.5bn pipeline to carry oil from Siberia to north-eastern China, Chinese state media reports.

Moscow has said it favours instead a pipeline to the Pacific to serve the needs of Japan and the US market.

China has now overtaken Japan as the world's number two oil importer after the United States.

Observers believe the issue could become the focus of energy tensions in the region for several years.

Yukos factor

China is this week hosting delegations from both Russia and Japan among the six parties involved in talks to try to resolve the North Korean nuclear stand-off.

But far away from the crisis diplomacy, the three countries are actually locked in a fierce strategic battle over the rich oil reserves of Siberia and the signs are not looking good for China.

Late last week, Russia's energy minister, Igor Yusufov, said that Moscow was close to a decision to build a pipeline to the Pacific coast to serve Japan's needs and the US market, rather than a rival project into north-eastern China.

This will not have come as a surprise to Chinese officials because there have been growing signs that Moscow is thinking that way.

But Chinese oil executives are not yet admitting defeat.

Analysts say one factor behind Russia's apparent backing-away from the Chinese pipeline may be that it was championed by the Russian oil giant Yukos.

Its former head, Mikhail Khodorkovsky, remains in jail on fraud and tax evasion charges in what many see as a highly-politicised case.

Japan offer

Then there are also the fears, particularly in Russia's sparsely-populated far east, about China's perceived threat to the region.

Moreover, Japan is reported to have offered big financial incentives and the prospect of significant energy co-operation with Russia.

All in all, whatever the outcome, the issue could become the symbol of growing tension among the three countries over oil resources in coming years.

http://news.bbc.co.uk/2/hi/business/3516129.stm

Reference:

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news.bbc.co.uk/1/hi/business/3514925.stm