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. Last Updated: 07/27/2016

Japan, China Jockey for Siberian Crude

TOKYO -- For energy-hungry Japan, it would be a major coup -- a multibillion-dollar pipeline pumping at least 1 million barrels of oil a day out of Siberia to the Sea of Japan coast.

Problem is, China wants the pipeline too. And there might not be enough oil to go around.

Decades in the talking stages, the rival projects to pump Siberian oil to either northern China or the Japan Sea have turned into something of a regional soap opera, with Beijing and Tokyo courting a very coy Moscow.

Until recently, China was seen as the suitor most likely to succeed, largely because its plan, which would have a shorter pipeline ending in its inland city of Daqing, would be cheaper to build.

But with increasing signs that a decision may finally be near -- possibly as early as this fall -- Japan is turning up the heat and offering to open up its checkbook.

Prime Minister Junichiro Koizumi made a plea for the Japan Sea plan during a visit to Russia in January, and then again last month. His predecessor followed up last week. And Foreign Minister Yoriko Kawaguchi is on her way to Vladivostok on Saturday to pitch for it one more time.

The line envisioned by Tokyo would link oil fields near the Siberian city of Angarsk to the port city of Nakhodka, covering about 3,800 kilometers on a route that winds around northeastern China, entirely within Russian territory, at an estimated cost of $5 billion.

The smaller proposed pipeline would stretch from Russia into China, covering about 2,400 kilometers and costing $2.5 billion to reach Daqing.

Daqing seemed to have won the contest last month, when newly inaugurated Chinese President Hu Jintao visited Moscow for his first summit with President Vladimir Putin.

During the visit, China National Petroleum Corp. and Yukos signed a preliminary agreement on a $150 billion deal to ship Siberian oil via the Angarsk-Daqing pipeline, prompting many observers to assume Russia had chosen the Chinese route.

But as the parade of Russia-bound Japanese officials suggests, Tokyo -- anxious over the situation in Iraq and desperate to cut its reliance on Middle East oil -- has not given up.

Shortly after Hu met Putin, Koizumi went to St. Petersburg during that city's 300th anniversary celebrations in late May and had a brief summit of his own with Putin to push the Nakhodka route. Putin emerged from the meeting saying neither possibility had been ruled out.

Then, last week, Putin praised the Nakhodka plan, saying it would allow Russia to export its energy resources not just to Japan, but to the United States, South Korea and the entire Asia-Pacific region.

Going Japan's way could have a significant trickle-down effect on the local Russian economy.

Japan National Oil Corp. president Yoshiro Kamata, visiting the region in mid-April, reportedly said Japan was willing to invest $1 billion in the Far East if the Nakhodka pipeline were built. He 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 consortiums.

Koizumi has also repeatedly offered to funnel more money into development projects in the region.

Russian officials, meanwhile, have indicated they do not necessarily see the matter as an either-or question, and have suggested a compromise in which a spur could be built to link the Nakhodka line with Daqing.

But Putin last week acknowledged it was still unclear whether there would be enough oil to fill it, or whether it would be able to turn a profit.

"The Angarsk-Nakhodka option looks preferable because it allows broad access to markets," he said. "That's an attractive option, and the only question is whether it's economically feasible."

The Cabinet had been expected to make the final choice in May or early this month, but Prime Minister Mikhail Kasyanov last week said it would be made in the fall.