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. Last Updated: 07/27/2016

Japanese Told China to Get Pipeline First

Russia will likely build a pipeline to transport oil to China from Siberia before completing a pipeline to Japan, Japanese media reported Wednesday, citing Industry and Energy Minister Viktor Khristenko.

Russia will first build a pipeline from eastern Siberia to Skovorodino, the midway point of the proposed 4,200 -kilometer pipeline to the Pacific coast, Jiji news agency quoted Khristenko as telling a group of Japanese reporters in Moscow.

Russia will then build an oil terminal in Skovorodino and send oil to China through a branch pipeline, said Khristenko, who is due to visit Tokyo on Thursday and Friday.

That indicated the branch pipeline would be completed before the entire pipeline to a port near Nakhodka, where the oil would be shipped to Japan, the report said.

China and Japan have been competing over routes for the pipeline, which is expected to cost $5 billion to $8 billion.

Khristenko is scheduled to meet Japanese Economy, Trade and Industry Minister Shoichi Nakagawa on Thursday to discuss issues including the pipeline.

In a separate statement issued Wednesday, Khristenko said that Russia would at first have to rely on oil pumped in western Siberia to fill the Pacific pipeline, as eastern fields will not be ready in time.

The government will auction rights to untapped oil fields in eastern Siberia while it is building the pipeline, he said.

"Access to the Pacific coast is of principal importance for Russia," Khristenko said in the statement.

"In any case, the pipeline route will be defined by the location of oil reserves, rather than by the location of the sea."

The pipeline project and its capacity will be amended, depending on exploration results in eastern Siberia, he said.

It is difficult to estimate eastern Siberia's recoverable reserves, he said.

The planned pipeline, which will be owned and operated by state-owned Transneft, expects to initially ship 600,000 barrels of oil per day.

(Reuters, Bloomberg, MT)