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. Last Updated: 07/27/2016

China Pipeline Given the Green Light

Prime Minister Mikhail Kasyanov said Tuesday that Russia has opted to build an oil pipeline to China and will leave open the possibility of constructing a pipeline to transport oil to Japan and beyond, local news agencies reported.

Kasyanov told reporters that at present there was enough oil available to fill a planned pipeline leading to the Chinese city of Daqing, with an estimated construction cost of some $2.5 billion. However, it is unclear whether there was a sufficient amount to fill a further planned segment that would lead to the Russian port of Nakhodka, on the Sea of Japan, for transport to Japan, South Korea, China and the Pacific coast of the United States.

"The decision on building a pipeline to Nakhodka will be made when it is determined what amount of oil is needed to fill this pipeline," Interfax quoted Kasyanov as saying.

Both China and Japan have been vying for oil from around the Siberian town of Angarsk, and Moscow was to make a final decision after a series of national holidays in early May. In March, Kasyanov said the pipeline to Nakhodka would be built first, and a spur to China would be added later.

Last month, the president of Japan National Oil Corp., Yoshiro Kamata, said Tokyo was prepared to invest $1 billion in the Far East if the Nakhodka pipeline were built, Itar-Tass reported from the Pacific port of Vladivostok. Kamata said Japan would fund construction of an oil sea terminal and refinery over four years, and that it was interested in participating in Siberian oil production consortia.

Interfax and Itar-Tass on Tuesday quoted an unnamed source in the Russian government as saying that Tokyo was prepared to provide a loan for construction of the Nakhodka pipeline, estimated to cost some $5.2 billion, but only on condition of Russian government guarantees. The source said the condition was unacceptable.

The source also said that it was unclear whether Moscow would accept Japanese investment in the pipeline in any case, saying "the question is whether we need such foreign property," the news agencies reported.

Kasyanov also said that he would soon sign an order to develop a plan for building a pipeline from western Siberia to the Arctic port of Murmansk, Itar-Tass reported. The project has the strong backing of many of the country's biggest oil companies, which are interested in expanding export potential and have said they want to build the line by 2007.