Transneft: Japan will get East Siberian pipeline � at a cost

The Deputy Head of Russia’s Transneft, Sergei Grigoriev, has indicated Japan will get the nod over China for the long disputed East Siberian pipeline. However, the cost to Japan may be US$2 billion more than what was expected.

Speaking to the Financial Times Grigoriev said, “Transneft [has] decided to construct the pipeline to Nakhodka instead of Daqing in China. Transneft [hopes] to complete a feasibility study on the route, which extends from Taishet in Siberia to Russia’s Pacific port of Nakhodka, by the end of this year.”

“The company [is] not examining any alternative routes,” added Grigoriev. The official warned, though, the cost of constructing a pipeline to Nakhodka may prove more expensive than originally envisaged.

“The cost of the pipeline could exceed $US12 billion which is double the $US6 billion initially estimated. The dramatic increase is likely to shock the Japanese government which has offered to underwrite the project on commercial terms,” said Grigoriev.

“The increase is largely due to the rising cost of steel pipe,” he added.

Transneft may have decided on the route of the pipeline but the Russian government has, apparently, not and has said an official decision on the matter will only be made available at the end of the year.