Pipedream

Tokyo, Nov. 21 (Reuters): Japan and Russia today agreed to work out next year the conditions for co-operating on an oil pipeline from Siberia to the Pacific coast, appearing to have inched closer to moving ahead with the stalled project.

The agreement was reached in a meeting between visiting Russian President Vladimir Putin and Japanese Prime Minister Junichiro Koizumi.

Russia is building a 2,566-mile, $11.5-billion pipeline across Siberia that will pump 80 million tonnes of oil a year (1.6 million barrels per day) to the Pacific, and Japan has been vying with China over the pipeline’s final destination.

Russian state pipeline monopoly Transneft is building the pipeline in two stages and expects to finish the first stage at Skovorodino, far from the coast but close to China, in 2008.

Japan has been keen to win a promise that Russia would carry on construction to a port in the Pacific, while China wants the pipeline to head south into its industrial north.

No date has been set for the second stage.

Referring to the conditions necessary for the two sides to proceed with the second stage, a joint statement said: “The two countries will aim to seek mutual understanding by the earliest possible stage next year.”

Japanese officials have said the co-operation, if realised, would include financial assistance by Tokyo.

While no exact date was mentioned, a Japanese official said the agreement was a “step forward” toward completing the pipeline to the Pacific.

Earlier on Monday, Putin, seeking to assuage Japanese fears that China would benefit most from the pipeline, also confirmed Moscow would build the pipeline to the Pacific coast.

“We plan to build the pipeline to the Pacific coast with eventual supplies to the Asia-Pacific region, including Japan,” Putin said in a speech, but gave no timetable or other specifics.

Japan and Russia also agreed to examine the possibility of inviting Japanese companies to develop oil projects in Russia jointly with Russian companies.