Russia Needs Pipelines to Mongolia, China, Korea to Capture Far East Energy Market

WEB EXCLUSIVE, Moscow. Moscow must focus efforts on developing critical energy infrastructure in the Far East in order to boost its energy relations with countries in the Asia-Pacific, according to panelists at the Moscow International Energy Forum on Wednesday. Russia can stimulate economic integration in the Asia-Pacific through joint energy projects.

Yet, it must also balance strategic and commercial goals to strengthen regional energy security and become one of Asia's largest hydrocarbons supplier, according to participants of the "Far East as Russia's 'Energy Bridge' to Asia-Pacific."

Access to reliable energy resources, stability and security of supply, and affordability of Russian oil and gas are important questions that Moscow must address in its push towards East Asia, Viktor Larin of the Russian Academy of Sciences said at the forum. "Currently, there is more competition than cooperation among players in the region," Larin said. "There are national interests related to economic development projects, as well as national security interests in maintaining regional stability. So what can Russia do? Moscow should expand its interests into areas where joint economic projects can be developed, rather than focus on geopolitical or political factors," Larin explained. According to Hirofumi Arai, Secretary General of the Northeast Asian Gas and Pipeline Forum of Japan, Russia could play a leading role in building a pipeline network in Northeast Asia.

There are currently no pipelines to Mongolia, China, and the Korean Peninsula from Russia, Arai said. Yet, countries in East Asia and the Asia-Pacific, including Japan, fall into the top five or top 10 categories for both consumers and producers of energy in the world. "Whatever some of these countries lack in terms of supply, countries like Russia could make up for it," Arai said. The Institute of Energy Economics, Japan forecasts a sharp increase in natural gas demand in the Asia-Pacific through 2035. China will be the largest market, making up about 40 percent of overall gas demand in Asia through this period, Arai explained. Developing joint economic projects like a pipeline network in Northeast Asia could deepen mutual trust among these countries and lead to a breakthrough for Russia in its energy relations with large Asian consumers, Arai said.

Nelli Semenova from the Institute of Eastern Studies at the Russian Academy of Sciences agreed. Asian gas demand growth could largely be satisfied by developing natural gas fields in East Siberia and the Far East, Semenova explained. Yet, infrastructure in Russia's Far East is lacking and the government must introduce new laws that will boost investment and attract investors to the region, Semenova said.

At the end of last year, Gazprom launched a new "Eastern Gas Program" aimed at developing large natural gas fields at Chayanda and Kovykta in East Siberia. The company also plans to build a new pipeline, "Power of Siberia," from these fields to new export hubs in Russia's Far East. However, analysts estimate that capital investment costs for the program range between 45 and 85 billion dollars, casting uncertainty over Gazprom's ability to finance the