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Russia greenlights pipeline to Pacific, hints China may get Yukos assets stake

MOSCOW: Russia said Friday it had ordered the construction of an oil pipeline from its huge Siberian oilfields to the Pacific Ocean opposite Japan, in a move to boost export opportunities throughout East Asia and to the United States.

A "system of pipelines" with an annual capacity of 80 million tonnes would be built from Taishet in Siberia to Perevoznaya near Vladivostok and the eastern port of Nakhodka, the government said in a statement.

Energy-thirsty Asian rivals Japan and China have been furiously competing for several years for access to supplies from the world’s second biggest oil exporter after Saudi Arabia.

But the 4,130-kilometre (2,560-mile) link to Nakhodka becomes the preferred option earlier this year after lengthy talks with Tokyo, which has said it, would finance its construction.

No price tag was put on the project Friday, but Russian officials have said previously it would cost some 16 billion dollars or almost seven times the cost of the alternative option to China.

Moscow’s decision to pump its vast eastern Siberian oil supplies towards Japan will come as a blow to China, whose energy-hungry economy has turned it into the world’s second largest oil consumer after the United States.

Negotiations with China were complicated by environmental concerns, with neither side able to agree on the route. For Russia, the Pacific route means that besides Japan, it could supply oil to other countries in the region, including South Korea, and even, potentially, the west coast of the United States.

Officials in Beijing have raised the possibility that a branch of Russia’s Pacific pipeline could be diverted eventually to China, where energy demand continues to outpace supply, although there was no mention of this in Friday’s statement from Moscow.

But in a major sweetener for Beijing, Industry and Energy Minister Viktor Khristenko on Thursday announced that Chinese oil conglomerate CNPC could be offered up to 20 per cent of the main asset of the dismembered Russian energy supplier Yukos.

In what would amount to a strategic energy tie-up between Russia and China, Khristenko said China National Petroleum Corporation (CNPC) could end up owning a significant chunk of the assets of Yuganskneftegaz, which pumps a million barrels a day and owns 17 per cent of Russia’s oil reserves.

Moscow has signed agreements with CNPC reflecting bilateral "strategic understandings" on the expansion of energy cooperation, deemed vital to long-term economic growth in both countries, he said.

Editorial Notes: Original title: "Russia orders oil pipeline to Pacific" -LJ

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