Russia sets '17 target for S. Korean pipeline gas

2nd November 2011, Comments 0 comments

Russian natural gas giant Gazprom said on Wednesday it hoped to start funnelling pipeline gas to the rapidly expanding South Korean market by as early as 2017.

Gazprom did not specify how it planned to send supplies to South Korea but it has been in talks to send gas to the South via a pipeline through Stalinist North Korea -- a regime that hopes to receive transit payments through the deal.

Gazprom chief Alexei Miller's comments followed talks in Saint Peterburg between Russian President Dmitry Medvedev and his South Korean counterpart Lee Myung-Bak during which the two sides discussed energy cooperation.

"We can expect Russian pipeline gas to South Korea to begin in 2017," Russian news agencies quoted Miller as saying on the sidelines of Medvedev's talks with Lee in Russia's second city of Saint Petersburg.

Gazprom spokesman Sergei Kupriyanov refused to confirm that Medvedev and Lee were specifically talking about deliveries through Noth Korea.

"How it will go, we do not say," Kupriyanov told AFP. "Pipeline gas can go by sea."

The land link has long been deemed infeasible because of the parties' hesitance to make the necessary multi-billion-dollar investments in the unpredictable Stalinist state.

But the project received an important boost when North Korean leader Kim Jong-Il made a promise to support it during Siberian summit talks with Medvedev in August.

The energy chiefs of both North and South Korea then signed separate deals with Gazprom in Moscow on September 15.

None of the parties involved has reported the precise content of those agreements or the progress of the talks. But analysts said one of the main stumbling blocks concerns the price the North is demanding for transits.

An executive at the South's Korea Gas Corp (Kogas) said in September that the construction of the North Korean section should cost about $2.5 billion and would represent the most economically viable plan for bigger Russian sales.

Gazprom began supplying liquefied natural gas (LNG) to South Korea once the project went online in the Pacific in 2009.

The Russian monopoly is now 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 power and gas providers in Japan.

© 2011 AFP

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