Gazprom, Yukos Broach Siberia Partnership

Gazprom is in talks with Yukos to partner up in the development of East Siberia's hydrocarbon reserves, a joint effort that could pave the way for exports to China. "Gazprom doesn't have a very deep base in Siberia and the Far East," Gazprom board member Boris Fyodorov told investors Monday. "It has less than 5 percent of total licenses. Yukos can be one of the big partners with Gazprom in this area." Yukos' press office confirmed that negotiations between the two companies are taking place. During the July visit of Chinese President Jiang Zemin to Moscow, Russia and China signed an agreement that cleared the way for a feasibility study on a 1,700-kilometer oil pipeline linking the two countries. Yukos president Mikhail Khodorkovsky has fought tooth and nail for such a pipeline, and construction could start as early as summer 2003. Last week, the China National Petroleum Corp. signed an agreement with Yukos and state-owned Rosneft to develop oil fields in the Irkustsk and Sakha regions. Gazprom is not as well positioned. Currently, its gas-trunk pipelines stop at Krasnoyarsk, but its alliance with global energy major Shell has emerged as the frontrunner in the bidding to build a gas pipeline to China. Gazprom also plans to participate in the development of the BP-operated Kovykta gas deposit in Eastern Siberia. Gazprom lacks capital to explore and develop Eastern Siberia on its own, a result of years of underinvestment and alleged asset stripping by former management, Saint Petersburg Times wrote.

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