6. Japan and PRC and Russian Oil and Gas
The New York Times, (James Brooke, "JAPAN AND CHINA BATTLE FOR RUSSIA'S OIL AND GAS," Vostochny, 01/3/04) reported that for now, Krylova Cape is not much to see: a spit of land between the Russian taiga forest and the Sea of Japan, its soil being graded a bit by a bright yellow bulldozer. But what is taking shape here is central to a pitched struggle between the two most important economies in Asia: the reigning titan, Japan, and its rising challenger, the PRC. Both economies are hungry for raw materials, especially energy - Japan because it has almost none of its own, the PRC because its economic boom has fast outstripped what once were adequate domestic supplies. Both want to limit their dependence on oil from distant, politically volatile regions like the Middle East. And both see an attractive alternative in the little-tapped energy riches of the vast, vacant Russian Far East. Getting oil to market from the remote East Siberian fields that Russia is ready to develop means spending billions on a pipeline. Japan and the PRC are fighting hard over where that pipeline will go: either to the PRC's northeastern industrial heartland, or to this stretch of Russian shoreline, where a new deep-water oil terminal will be just one day's tanker cruise from Japan. With the choice Russia faces, the political and economic dynamics of Northeast Asia stand to be profoundly shaped for years to come. "The Chinese will be furious if the Russians do not give them the pipeline," said Graham Hutchings, an Asian specialist with the British consulting group Oxford Analytica. The pipeline rivalry offers a taste of more battles to come, as the PRC moves aggressively to secure access to resources it needs to keep wheels spinning in "the factory to the world." "We are about to enter an age in which Japan and China scramble for oil," Yoichi Funabashi, international affairs columnist for Japan's Asahi Shimbun, wrote recently. "China acts, and Japan reacts. Now, we are losing the oil race." In Moscow, advocates of a PRC pipeline say that binding Russia and the PRC together in economic interdependence would be good for regional stability, on the model of Canada and the US. Similar reasoning helped propel a $17 billion project to build a 3,055-mile natural gas pipeline from eastern Siberia to serve northeast PRC and ROK, which won initial approval in November. The PRC's voracious appetite for energy is also lighting a competitive fire under Japan's conservative electric utilities, which have been slow to commit to new development projects. Exxon Mobil tried for years with little success to interest Japanese utilities in a 1,200-mile gas pipeline from its gas development on Sakhalin Island, Russia, to Tokyo. Interest suddenly perked up when Exxon Mobil let it be known that it was studying an alternative 1,000-mile pipeline to Harbin, PRC. The PRC has also plunged ahead with deals to bring in more liquefied natural gas from Indonesia and Australia, where Japan also buys gas. "Japan Inc. is thinking that there is no shortage of supply, that there will be another bus in a minute," Mr. O'Sullivan said. "China is building terminals." The yellow bulldozer's grading work here will not be in vain, whatever Moscow decides. Krylova Cape is at the eastern end of the Trans-Siberian Railroad. Next year, work will begin in earnest on the oil terminal, with plans for 140,000 barrels of oil a day to reach the port by rail for shipment to Japan and elsewhere. "Krylova Cape is a good spot," Viktor S. Gnedzilov, mayor of Nakhodka, the municipality that oversees the cape and this port, said in an interview. "There is the railroad. The piers can be extended one kilometer. We expect that vessels up to 300,000 tons could come to the pier. It would be a colossal benefit for Nakhodka - jobs, businesses, development, foreign investments." In Russia's thinly populated Far East, the Japanese pipeline is seen as a counterbalance to the PRC, a partner Russians view with some misgivings. "Many people here believe Japan is a more predictable country," said Alexei Kabanchenko, spokesman for Nakhodka, a Slavic outpost whose billboards proclaim: "Russia starts here." http://www.nytimes.com/2004/01/03/business/worldbusiness/03asia.html?ex=1074413306&ei=1&en=46e39863a39f93fc
7. Northwest EnergyIdeas Clearinghouse
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