Following the request of Russia's biggest gas company Gazprom to Japan that it should help co-fund the construction of the Sakhalin-Khabarovsk-Vladivostok pipeline, Japan has reportedly offered to provide $2 billion on condition the money would be spent on Japanese pipes.
According to Gazprom management committee deputy chairman Valery Golubev, Gazprom is considering the Japanese offer as a possible source of funds; however, the company's main goal is to buy pipes of Russian production. "We will try to manage it with our own possibilities and to build relations with our pipe producing companies in order to construct a pipeline of Russian production," Mr. Golubev added.
Meanwhile, head of the Russian Pipe Industry Development Fund, Alexander Deinenko, has said that Russia's biggest pipemakers such as TMK, United Metallurgical Company (OMK) and Severstal have already applied for Gazprom's pipe supply tender, while other Russian pipe producers are working at less than full capacity and are also looking for orders.
"Our attitude to the fact that Japan links this loan with pipe supplies is negative. We are fully capable of satisfying the demand both in terms of quantity and quality," Mr. Deinenko commented.
According to some experts, the transportation of pipes from Japan to Russia's Far East may be cheaper, but Japanese pipes are 15-20 percent more expensive than Russian ones. A final decision is yet to be made.
The 1,800 km Sakhalin-Khabarovsk-Vladivostok pipeline, which will supply gas to the Russian Far East, targeting potential gas exports to China and other Asia-Pacific countries, is expected to cost around $11 billion. The construction of the pipeline was launched on July 31 this year and is expected to be operational by the end of 2011.