Russia plays along with Sakhalin
pipeline project By Sergei
Blagov
Russia's gas monopoly, Gazprom, has
apparently ruled out the possibility of building a
subsea Sakhalin-Japan natural gas pipeline.
However, the continuation of talks on this
ambitious project is thought to remain a valuable
bargaining instrument in Russia's difficult
negotiations with China on gas prices.
On
November 8, the head of Gazprom's representative
office in Sakhalin, Vladimir Kozlov, announced
that the gas giant was yet to make any formal
decision on Japan's suggestions to consider the
pipeline project. On November 4, the Japanese
newspaper Asahi claimed that Japanese companies
were prepared to invest US$5 billion in the
construction of a 1,400-kilometer gas pipeline
with a capacity of 16 - 20
billion cubic meters (bcm) from Sakhalin to
Japan's Ibaraki Prefecture.
The project
would involve the gas pipeline from Prigorodnoye
Port in southern Sakhalin to the island of
Hokkaido, then to the south along Japan's eastern
coast through the Aomori, Iwate, Miyagi and
Fukushima Prefectures. Tokyo Gas, Japan Petroleum
Exploration (JAPEX) and Nippon Steel & Sumikin
Engineering reportedly indicated interest in the
project.
In May 2009, Gazprom signed a
memorandum of understanding (MOU) with Japan's
Natural Resources and Energy Agency, Itochu Corp,
and Japan Petroleum Exploration Co to prepare a
feasibility study on future gas supplies to Japan
and other Asia-Pacific countries.
However,
earlier this year, Gazprom pledged to abandon the
Sakhalin-Japan pipeline project. On June 29,
Gazprom chief executive Alexei Miller announced
that after considering several possible routes,
the company found the pipeline project
economically and technically unjustified. Gazprom
would focus on LNG supplies to Japan, he said. The
Russian energy giant's executives had previously
noted significant seismic risks associated with
this pipeline project.
Yet despite
Gazprom's apparent reluctance, the Japanese
continued to insist that the Sakhalin-Japan gas
pipeline could eventually prove feasible. On
September 26, executives of Japan Pipeline
Development & Operation Inc (JPDO), speaking
at a conference in Yuzhno-Sakhalinsk, asserted
that the pipeline project remained technically
possible and economically viable.
The
continued discussion of projects to supply energy
resources to Japan could be used to put pressure
on China, Izvestia daily commented on November 12.
Japan currently faces energy shortages and could
become a better market for Russian energy
resources than China, the daily noted.
In
August, Japanese officials sent a letter to the
Russian energy ministry and suggested renewing
discussions on the Sakhalin-Japan pipeline
project, according to Izvestia. Gazprom's CEO
Miller was expected to discuss this project during
a visit to Japan on November 27-29, the daily
wrote. However, Gazprom may prefer to focus on LNG
exports in the Far East rather than building the
Sakhalin-Japan pipeline, the Russian paper
commented.
The pipeline project is also
understood to involve political risks as Moscow
has been refusing to discuss a return to Japan of
four islands, Kunashir, Iturup, Shikotan and
Habomai, known as the Southern Kurils in Russia
and the Northern Territories in Japan. Moscow has
consistently dismissed Japan's insistence to
return all four islands. The bilateral political
ties reached new lows after Russia's top officials
traveled to Kunashir in late 2010 and mid-2012,
sparking vocal protests in Tokyo. But the Kremlin
has kept dismissing Japanese protests.
In
recent years, Russian officials have repeatedly
encouraged Japanese investment in energy and
invited Japanese companies to join the East
Siberia-Pacific (ESPO) oil pipeline and the
Sakhalin-Khabarovsk-Vladivostok gas pipeline
projects. Russian officials also indicated plans
to build a major petrochemical complex in Russia's
Far Eastern regions, and invited Japanese
businesses to invest in these projects. Yet
despite repeated Russian invitations, Japanese
businesses have largely refrained from taking part
in Russia's programs to develop Far Eastern energy
infrastructure, including ambitious pipeline
projects.
Apart from the Sakhalin-Japan
pipeline project, the Russian government also
ordered the energy ministry to review an earlier
project, designed to increase electricity supplies
to Japan, South Korea, China and Mongolia. The
project, known as the "Asian Super Ring", first
surfaced back in 1998. It was supposed to export
surplus electricity, generated by Siberian
hydropower plants. The pre-feasibility study of
the energy link was done back in 1999 - 2000, and
the project was estimated to cost $9.6 billion.
However, this year the Russian energy ministry
reportedly suggested starting the Asian Super Ring
project by building an electricity transmission
line from Sakhalin to Japan. The talk about the
Asian Super Ring and the Sakhalin-Japan pipeline
project was apparently meant to put some extra
pressure on Beijing in the continued negotiations
on the price of Russian energy supplies to China.
As Tokyo was slow to respond with binding
investment agreements for the Russian Far Eastern
projects, the Kremlin evidently became upset by
Japan's reluctance. Subsequently, Gazprom withdrew
its support of the Sakhalin-Japan pipeline
project. But Russia's gas giant remains slow to
announce any formal decision on the pipeline,
presumably preferring to keep it as a bargaining
chip in Russia's gas talks with China.
Prior to working as Moscow-based
independent researcher and journalist, Dr
Sergei Blagov was a newswire reporter. He
spent nearly seven years reporting from Hanoi,
Vietnam, between 1983 and 1997.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
