OGJ editors
HOUSTON, Jan. 20 -- No decision on the route of an Asia-bound oil pipeline from the East Siberian city of Angarsk has been announced, but the Boston-based Energy Security Analysis Inc. (ESAI) said Japan is likely to prevail over China.
ESAI believes a proposed pipeline to the Chinese city of Daqing currently stands little chance. That pipeline was supposed to help OAO Yukos fulfill its obligations under a 25-year supply agreement signed with China National Petroleum Corp. last year (OGJ Online, May 30, 2003).
Yulia Woodruff, ESAI Russian oil analyst, said that Yukos's mounting troubles, particularly a $3.3 billion tax bill, have shifted its emphasis from expansion to survival. Yukos has indicated readiness to supply crude to Nakhodka if that pipeline route prevails. Nakhodka is on the Pacific Coast.
"The likely demise of the Angarsk-Daqing pipeline indicates that for the Kremlin, near-term increase in export capacity is a lesser priority than strengthening the market position of state-owned and politically close energy companies," Woodruff said.
Russia's state-owned oil major Rosneft, a rival of Yukos, supports the Nahodka line. Woodruff said the Nakhodka route has geopolitical advantages and would help strengthen competitive positions of the state-favored energy majors, which recently formed an East Siberian consortium.
"It will be a long time before the Nakhodka line will be built, and there will be many obstacles, but it is looking like the more likely option than Daqing," she said.
Last year, the Japanese government denied published reports that it was offering Russia a $7 billion financial package as an inducement to persuade Russia to build the Nakhodka line instead of the route into Daqing in northeast China (OGJ Online, Oct. 15, 2003).
Russian authorities repeatedly have maintained that there is not enough oil available for export in Eastern Siberia to justify both pipelines, and they insist that substantial investment is needed to develop the resources needed to supply the lines. (OGJ Online, May 30, 2003).
Japan is seeking Russian oil to reduce its dependence on crude oil imports from the Middle East. In addition, Japan also is concerned about increased competition with China for oil. China became a net importer of oil in 1993 and in the coming decade could overtake Japan as the world's second-largest importer of oil.
