Japan pushes talks on East Siberia-Pacific oil line

May 30, 2006
Japanese Foreign Minister Taro Aso on May 29 urged Russian Chamber of Commerce and Industry Pres. Yevgeny Primakov to hasten the start of talks on construction of the proposed East Siberia-Pacific Ocean (ESPO) crude oil pipeline.

Eric Watkins
Senior Correspondent

LOS ANGELES, May 30 -- Japanese Foreign Minister Taro Aso on May 29 urged Russian Chamber of Commerce and Industry Pres. Yevgeny Primakov to hasten the start of talks on construction of the proposed East Siberia-Pacific Ocean (ESPO) crude oil pipeline.

In Tokyo for a conference on investments in Russia's economy, Primakov said Russia intends to cooperate with Japan on the project, which will extend 4,130 km from Taishet in Eastern Siberia to an export terminal on the Pacific Ocean.

Japanese Prime Minister Junichiro Koizumi and Russian President Vladimir Putin last November signed an agreement in Tokyo that said Russia would export "considerable amounts of oil" to Japan and other countries from its Pacific coast, possibly from 2008. But China also has been lobbying Russia to build the pipeline along a different route to secure a stable oil supply.

On May 24, Russian state-controlled bank Sberbank granted a 6-year loan of 65 billion roubles ($2.4 billion) to Russia's state-run pipeline monopoly Transneft for construction of the first part of the ESPO pipeline, which is aimed at transporting 30 million tonnes/year of oil.

On Apr. 28, Transneft began building the initial phase of the pipeline from Taishet to Skovorodino near the border with China. But Russia has not set a schedule for starting construction of the pipeline beyond Skovorodino, saying new oil fields need to be developed to make that extension commercially viable.

In March, Putin asked Japan for financial help in developing oil fields that would supply the pipeline. He made his request to Akira Nishino, senior vice-minister of Japan's economy, trade, and industry, and other Japanese government officials visiting Moscow to attend a meeting of Group of Eight energy ministers held on Mar 17.

Nishino said Japan is considering providing financial aid to the project, which it regards as a new source of oil supply. But environmental protests in Japan, which affect Tokyo's ability to fund the project, have yet to be resolved.

Environmental concerns
On May 2, the Japan Wildlife Conservation Society and the Friends of the Earth said Japan should reconsider cooperating with the project in its current form as construction of an oil export terminal at Perevoznaya Bay would affect the endangered Amur leopards.

The groups submitted requests and signatures asking the Japanese government not to provide official loans or other forms of aid for the project.

They said Russia's oldest wildlife sanctuary lies near Perevoznaya Bay on the west bank of Amur River, where the ESPO oil terminal is planned.

Many endangered species live in and outside the sanctuary, including the leopards, whose population in the area is believed to total only 35. Building the terminal will seriously damage the region's ecology, the groups said.

However, they said the impact of construction could be thoroughly mitigated by moving the planned site 10 km eastward to an area near Nakhodka Bay. On the groups' request, Japan's Agency for Natural Resources and Energy has said the government puts importance on environmental issues.

Meanwhile, in Russia on May 30, the Supreme Court upheld a resolution by the Russian government on the construction of the ESPO pipeline. The Court rejected an appeal by several Russian environmental organizations claiming construction might damage the environment around Lake Baikal.

Last week, the Russian government said the ESPO pipeline would be constructed by December 2008 despite a ruling that will increase its length by 1,920 km due to environmental considerations (OGJ Online, May 25, 2006).

Contact Eric Watkins at [email protected].