Eric Watkins
Oil Diplomacy Editor
Russia's state-owned East Siberia-Pacific Ocean oil pipeline received two boosts last week: oil discoveries in Eastern Siberia and a pirate attack on a tanker off Kenya's coast.
Japan Oil, Gas & Metals National Corp. (Jogmec) confirmed rich reserves of oil and natural gas in three East Siberian fields, namely Severo-Mogdinsky, Zapadno-Yaraktinsky, and Bolshetirsky.
Jogmec and local partner Irkutsk Oil Co. have confirmed the presence of a high-quality crude that is light and low in sulfur in Severo-Mogdinsky field.
The firms estimate the field will hold 50 million tons of oil, or about 370 million bbl.
Jogmec and Irkutsk Oil also have confirmed oil and natural gas reserves at the other two fields, south of Severo-Mogdinsky.
Large-scale oil fields have been found nearby, so these two fields are also considered highly likely to hold sizable reserves.
A boost to expansion
The discoveries are a boost for Russian authorities as they will add to the growing volume of oil needed to enable the long-planned and much-discussed extension of the ESPO out to the Pacific Coast. But the second boost applies to the Japanese.
Output from the fields can be delivered to Japan in just 2-3 days via tanker because the pipeline will extend to Russia's Pacific Coast port of Kozmino.
That shipping time to Japan represents a significant reduction from the current two-week delivery time from the Middle East.
Indeed, with Russian companies also developing oil fields in eastern Siberia to boost exports to the Asia-Pacific region, Russia's share of Japanese oil imports may rise to the mid-10% level in the near future, allowing Japan to reduce to 80% its dependence on the Middle East.
Avoiding pirates
While Japan will clearly benefit from the reduced expenditure of transporting oil, the more important point by far is that the pipeline will substantially increase the energy security of the East Asian nation by avoiding the problem of piracy that now shadows the oil shipping industry.
A reminder of that problem arose last week with reports that Somali pirates hijacked a Singapore-flagged LPG tanker off East Africa.
EU Navfor, the European Union's antipiracy task force, said, "The MV York, deadweight 5,076 tons, has a crew of 17, of which 1 is German, 2 are Ukrainians, and 14 Filipinos."
The MV York is a small tanker and the attack took place outside the normal route of oil supplies to Japan.
But the MV York incident still served as a reminder of earlier attacks in the region and the dire effects they could have on Japan's security of supply.
The ESPO is a welcome development in the region.
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