ASIA

Japan backs Siberian pipeline

Tension over Iran's nuclear program may prove to be a financial windfall for Russian oil producers as Japan moves to promote a Siberian pipeline plan as an alternative source of fuel.

Despite two years of negotiations with Iran by a state-backed consortium of Japanese companies Japan has received international pressure to withdraw from the deal due to Iran's suspected development of nuclear weapons.

The Kyodo news agency reported that Japan's Ministry of Economy, Trade and Industry will dispatch Iwao Okamoto, director general of the Natural Resources and Energy Agency, to Russia for talks with government officials about the plan to link eastern Siberia's Angarsk oil field with Nakhodka, a port city in Russia's Far East.

If an agreement is made it is thought the 3,400km project would be set for completion in 2009, giving Japan a route to access oil from eastern Siberia which has crude oil deposits estimated at between 4 billion to 5 billion barrels.

Currently around 90% of Japan's oil is sourced from the Middle East but the pipeline project is expected to reduce this exposure to about 65%.

Japanese heavyweight political leaders such as former Prime Minister Yoshiro Mori have been championing the project after Russia already accepted a Chinese-proposed pipeline route from Angarsk to Daqing.

However, Kyodo also reported that the oil industry is somewhat detached from the idea because of high costs involved due to widespread frozen soil and delayed infrastructure development in eastern Siberia.

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