Russia inks North, South Korea pipeline deals

15th September 2011, Comments 0 comments

The energy chiefs of North and South Korea signed draft deals Thursday with Gazprom to funnel Russian natural gas across the peninsula under a project long-abandoned because of its political risks.

The Kremlin hopes the lucrative multi-billion-dollar link will unite the two Koreas in a common cause at a time of flaring tensions and afford Russia the prestige of acting as peacemaker in a conflicted region.

But analysts warn that much depends on the good will of the Stalinst state's leadership and its commitment not to use the pipeline as blackmail against the South.

Gazprom said in separate statements that its chief Alexei Miller held talks Thursday with North Korea's Oil Minister Kim Hui-Yong and the South's Korea Gas Corp (Kogas) president Choo Kang-Soo.

The first round of talks with the North's Kim concluded with the signature of a memorandum of understanding while the second with Choo produced a "roadmap" for future gas deliveries to the South.

There was no confirmation from either party about whether Kim and Choo had met as well.

Gazprom said its meeting with the North Koreans covered the "practical organisation" of future construction and laying work.

"Among other things, the sides agree to create a joint working group for implementing the project and developing other promising areas of cooperation," the Gazprom statement said.

It added the two sides also "noted the importance of providing all-round support for the gas pipeline's construction from the two countries' governments."

The second comment appeared to be a clear reference to Kim Jong-Il's promise to Russian President Dmitry Medvedev at their Siberian summit last month to provide the North's political backing to the deal.

The Russian media had until then reported that both Gazprom and the Kremlin were losing hope in the project because of the North Korean leader's continued unpredictability and propensity to stir up tensions with the South.

Kogas and Gazprom signed their first framework pipeline agreement in 2008 and have since been largely stalling for time as uncertainty swirled around the North and its complex succession issue.

The South Korean company announced Choo's visit only after it became clear that the North Korean oil chief was also visiting Moscow and the statement released by Gazprom hinted of progress made throughout the day.

"Alexei Miller and Choo Kang-Soo signed a roadmap on this project, and discussed the organisation of practical work about its implementation," Gazprom said.

The world's largest natural gas producer has been keen to expand its Asian sales and has been supplying liquefied natural gas (LNG) to South Korea since the Sakhalin-2 project went online in the Pacific in 2009.

Gazprom is under contract to ship 1.5 million tonnes of LNG per year to the South through 2025 -- a deal that does not suit the South's record-breaking energy needs.

The pipeline's potential is especially important to the South because most of the Sakhalin-2 gas is sent directly to Japan to that country's power and gas providers.

Thursday's deals were signed on the day after the Izvestia daily reported that Russia was ready to write off the North's $11-billion Soviet-era debt in exchange for closer economic cooperation.

© 2011 AFP

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