MOSCOW (AFX) – TNK-BP unit Russia Petroleum said it signed a feasibility study agreement with China National Petroleum Corp and Korea Gas Corp for a US$17 billion project to supply Siberian gas to Chinese and South Korean markets.
The 4,887-kilometre (3,055 mile) pipeline would transport gas from the vast Kovytka gas field near Lake Baikal in eastern Siberia to South Korea through China and the Yellow Sea.
Asia’s longest pipeline will tap into estimated reserves of 1.9 trillion cubic metres of gas, “one of the largest undeveloped gas fields in the world,” said Harry Griffits, Rusia Petroleum deputy director general in Moscow.
“By the realisation of this huge-scale project, Russia, China and South Korea will receive lots of benefits, raising revenues for Russia and long-term energy diversification for China and Korea,” said KOGAS chief executive Oh Kang Hyun.
“Russia is rich in mineral resources. China has a fast-growing economy and South Korea is a country with a stable economy and a high demand for energy,” added another KOGAS executive Jae-Hyun Chung.
“Russian gas will be popular in the Chinese market,” said CNPC’s Miao Chenguu.
Under the 30-year project, Russia will supply 20 billion cubic meters of natural gas a year to China and 10 billion cubic metres to South Korea and sell 4 billion cubic metres on the domestic Russian market,
Gas deliveries are due to start in 2008.
The cost swelled from an original estimate in 1995 of US$11 billion because of the higher-than-expected costs of developing the Kovytka gas fields, which turned out to have bigger reserves than expected.
Viktor Vekselberg, chief operating officer of TNK-BP, said the giant project was “realistic, implementable and commercially viable.”
“Our company TNK-BP, with our new Western partners, who have huge experience in such projects, believe in its success,” he added.