Eric Watkins
Senior Correspondent
LOS ANGELES, May 20 -- The European Bank for Reconstruction and Development (EBRD) will lend money towards an oil exploration project that Russian firm Irkutsk Oil Co. plans to launch jointly with Japan, and the bank also will acquire an 8% stake in the project.
EBRD's moves may facilitate the extension of Russia's planned East Siberia Pacific Ocean oil pipeline from Skovorodino, near Russia's border with China, to the Sea of Japan because Russia's extension depends upon its producing enough oil from Siberian fields.
Irkutsk Oil is developing oil fields in four areas under exclusive concession rights granted by the Russian government, and it is expected to spend more than $500 million on operations over the next 7 years.
A joint venture set up by Irkutsk Oil and Japan Oil, Gas, & Metals National Corp., a government-affiliated body, is scheduled to start test-drilling for oil in the region as early as this winter.
Irkutsk Oil exports roughly 40% of its crude output to Japan, but that rate is expected to rise significantly if the joint project goes well.
Russia is building the ESPO line in eastern Siberia, and has tentatively decided to complete Phase 1 of the line as far as Skovorodino. If its oil exports to Japan increase greatly from current levels, it likely will decide to extend the pipeline to the Sea of Japan.
Contact Eric Watkins at [email protected].
