Russia » Economics

Korea and China to Purchase Russian Gas 30 Years in Advance

In a recent solemn document signing ceremony regarding a new gas-condensate field development in Kovitkin, nothing has clearly been determined about the future of this monstrous project. Potential sellers and buyers have only been able to finalize the project and agree on its initial price-$17 billion.

Russian "RUSSIA Petoleum", Chinese CNPC and Korean Kogas have not reached consensus on the established price just yet.

According to a letter of purchase and sale signed after a meeting, China will get 600 billion cubic meters of Russian gas in the course of 30 years. Korea will receive just 300 billion. Russian gas supply is scheduled to begin in 2008. By 2017, the supply should be stable. While exporting about 20 billion cubic meters of gas to China and 10 billion to Korea, Russia will still possess 4 billion to satisfy its internal demand.

Mr. Mao Chen U, representative of the Chinese CNPC, decided to show off. During the official ceremony of the document signing he has mentioned that they are planning to construct the longest pipeline in the world and subsequently, in Asia. Its presumed length is 4987 kilometers. Harry Griffith, Deputy Director of "Russia Petroleum" owning a license for Kovikta has declared that current resource of the gas field equals to 2 trillion cubic meters. The retrieved resources however constitute only 1 trillion cubic meters. "Its [town of Kovikta] area exceeds that of Moscow", states Deputy Director. "In addition, it is much hard to travel there due to the lack of infrastructure."

Today, there exists only a signed document between the three companies. The companies however are not bound by any promises on the State level, states "Izvestia". Each one of them considers to present the project for government's further consideration. All three candidates hope to receive approval no later than the first quarter.

The Kovitkin's pipeline stretches from the East. It passes by the southern border of lake Baikal, crosses Russian-Chinese border in Manchzjuria, reaches Shenyan, Dalyan and following the water floor of the Yellow sea finally reaches Korean Phenyan. According to "Izvestia", the project might never be realized. It turns out, that its route lies through a national reserve. This may cause local ecologists to raise their opposing voices and shutting down the entire project. Viktor Vexelberg, Chairman of the Directors' Council of "Russia Petroleum" however, does not show any signs of worry.  "The pipeline does not touch the territory of the reserve."

Now all parties plan to start negotiations about funding. Director Kim Mieng-Nam of Kogas has already expressed his desire to participate in the project of Kovikta's development. China is also eager to aid with its investments.

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