SPEAKING
FREELY Japan looks north for Russian
energy By David Nguyen
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
The talks last month
on reinstating a visa-free regime between Japan
and Russia represent another step in improving
relations that have long been strained by disputed
claims to the Kuril Islands chain.
Late
last year, Russia favored Japan's request to build
an oil pipeline to Nakhodka instead of to Daqing
in northeastern China. With continuing instability
in the Persian Gulf region threatening Japan's
interest in Iranian oil, as well as the rising
global demand
for
energy, it is no surprise that Russia has become
an appealing source for energy.
Siberia
and the Russian Far East hold vast quantities of
oil and natural gas. According to the Business
Information Service for the Newly Independent
States (BISNIS), Sakhalin's explored estimated
reserves contain about 350 million tonnes of oil
and 600 billion cubic meters of natural gas.
Further north in the Republic of Sakha, reserves
are estimated to be 309 million tonnes of oil, and
as much as 2.2 trillion cubic meters of natural
gas. There are additional deposits elsewhere,
lying offshore near the Kamchatka Peninsula and
Magadan.
Because of Sakhalin's close
proximity to Asian markets (it lies only 40
kilometers north of Hokkaido), the island has
received much attention from Western investors
hoping to develop its 112 known petroleum
deposits.
Indeed, Japan has been quick to
stake its claim to Sakhalin's rich energy
resources and maintain its presence in the two
largest Sakhalin offshore consortiums, Sakhalin I
and II. Thirteen Japanese companies, referred to
collectively as the Sakhalin Oil & Gas
Development Co Ltd, hold a 30% share in the
Sakhalin I offshore project, while Mitsui and
Mitsubishi hold 25% and 20% of Sakhalin II shares
respectively. It is expected that Japanese oil
companies will seek shares in the Sakhalin III-VI
projects, currently in the early stages of
development. Elsewhere, Japanese companies such as
Nippon Steel are building export terminals,
pipelines and refineries around the island.
To the west of Sakhalin, in mainland
Russia, lies the Republic of Sakha, the largest
administrative subdivision within the Russian
Federation. Nearly the size of India, the republic
contains an enormous array of natural resources,
ranging from one of the world's largest deposits
of diamonds to perhaps the largest natural-gas
reserves in the Russian Far East as well as the
second-largest oil reserves.
Unlike on
Sakhalin, development of these resources has been
slow, because of brutal climatic conditions and a
lack of infrastructure. There is only one major
rail line, which connects the southern tip of
Sakha to the Amur-Baikal Railway. There is also
only one road, connecting Sakha to another
administrative division, Magadan. As a result,
many of Sakha's goods come from ships traveling
the Lena River during summer, and vehicles
traveling over the frozen river in winter.
The climate is so severe that Sakha is
considered one of the coldest inhabited regions in
the world. It is no surprise that few have jumped
on the opportunity to develop the region, since
lower productivity due to cold and the need to
build additional infrastructure would result in
massive costs.
Despite such obstacles,
Russia has been pushing for ambitious projects
that include building a pipeline that would travel
south into North and South Korea, which would then
enable oil to be exported to Japan. Other projects
in Sakha include exporting electricity from
hydropower complexes to Asian markets and
increasing coal production in the Nerungri mines,
which have been providing coal to Japanese steel
companies.
While Japan reaps the benefits
of its victory in securing the Nakhodka line,
China has grown increasingly frustrated with the
difficulties in securing new pipelines from
Siberia, as well as being prevented from acquiring
stakes in Russian energy companies such as
Slavneft, and Yuganskneftegas. It was only last
November that Russian President Vladimir Putin
proposed a Russo-Japanese economic partnership
that would help Japan to counterbalance China's
growing economic influence.
To add further
strain to the Sino-Russian economic partnership,
Russian military exports to China have been
decreasing annually as China's military industries
continue to make rapid progress in designing
weapons domestically, removing the need to acquire
similar items from Russia. In the near future it
can be expected that both Chinese and Russian arms
manufacturers will compete over the same markets.
Although both countries have made significant
progress in finalizing their borders, Russia
continues to be suspicious of large Chinese
migration into its sparsely populated far eastern
administrative divisions.
The energy boom
in Central Asia has been difficult for Japan to
exploit because of the sheer distance and
pipelines that would involve going through rival
China or Iran, given the reluctance to use Russian
pipelines. While Japan does import oil from Iran,
the growing controversy over that country's
nuclear programs, which could lead to new
sanctions or even a military invasion, threatens
Japan's energy interest there.
Because of
its geographical proximity and the success Japan
has had in securing pipelines and a large
percentage of shares in energy ventures there, the
Russian Far East represents Japan's most viable
option in diversifying its energy sources. But
should Japan and Russia decide that a closer
relationship would more fully enable them to
counterbalance regional rivals, it would be
necessary for the two to conclude their dispute
over the Kuril Islands.
David
Nguyen is a University of Hawaii alumnus with
a degree in political science and Asian
studies.
Speaking Freely is an
Asia Times Online feature that allows guest
writers to have their say. Please click hereif you are interested in
contributing.
