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Russia, Japan to Construct Pipeline

Russia, Japan to Construct PipelineRussia, Japan to Construct Pipeline

Despite Russia’s worsening relationship with Western Europe and the US over the Ukrainian crisis, its ties with Japan have tended to be more flexible, even as Tokyo has followed its Western allies by imposing sanctions on Moscow.

It was confirmed last week that President Vladimir Putin will meet with Prime Minister Shinzo Abe on the sidelines of the APEC Summit in Beijing next month. Now, it appears an agenda for those talks may be forming.

On Wednesday, the Nikkei reported that Russia is interested in restarting talks to build a natural gas pipeline between its Sakhalin Island and Japan’s far northern island of Hokkaido, according to a senior Japanese foreign ministry official.

The source said that Russia brought up the plan last month, while also saying “Construction of a pipeline will depend on the Ukraine issue and negotiations over the Northern Territories.”

The plan has been dormant since late spring, just after China signed a similar massive pipeline deal with Russia.

Despite the escalating conflict between Russia and Ukraine at the time, as late as May 23 a group of 33 Japanese lawmakers were lobbying the Abe administration to push the pipeline in talks with Putin in Tokyo scheduled for this fall, which were later cancelled.

Russia already supplies 9.8 percent of Japan’s LNG imports. The proposed pipeline would deliver 20 billion cubic meters of natural gas every year, which at full capacity would supply 17 percent of Japan’s total natural gas imports.

As an additional bonus, using a pipeline does not require the building of expensive regasification plants, and natural gas from Russia would probably still be cheaper, as prices for the prospective Russia-China pipeline are expected to be $10.50 to $11.00 per million British thermal units (BTUs), while Japan’s LNG import price was $13.05 BTUs on October 10.

 

Financialtribune.com