Progress on pipeline as officials visit Russia

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Progress on pipeline as officials visit Russia

The head of the Korea Gas Corporation, South Korea’s state gas supplier, left for Russia yesterday, amidst increased expectations for a trilateral deal to build a pipeline carrying Russian gas through North Korea to the South. A day earlier, a North Korean delegation led by its oil industry minister embarked on a visit to Russia, according to the North’s media.

Choo Kang-soo, president of KoGas, “left for Russia today and is scheduled to return on Saturday,” an official of the state gas provider said yesterday. The company declined to comment on the purpose of the visit, but it is widely seen as a follow-up to the CEO’s talks with Gazprom, Russia’s largest gas exporter, last month.

Choo met with Aleksandr Ananenkov, Gazprom’s deputy chairman, in Russia on Aug. 5, where they announced the two companies would draft a road map detailing a method for supplying gas to the South.

North Korea’s oil industry minister, Kim Hui-yong, and other North Korean officials also left for Russia on Tuesday, the North’s Korean Central News Agency reported yesterday, for what are presumed to be working-level talks on a deal made during last month’s Pyongyang-Moscow summit.

The plan to transport gas from Russia’s Far East region through a pipeline linking the two Koreas had been stalled for years because of a lack of cooperation from the North, but the North has indicated it is ready to proceed with the deal by holding talks with Russia several times this year. In his first visit to Russia in nine years, North Korean leader Kim Jong-il last month was reported to have agreed with Russian President Dmitry Medvedev to cooperate on the deal.

Kogas, the world’s biggest corporate buyer of liquefied natural gas, signed a memorandum of understanding with Gazprom in September 2008 to create a pipeline through which Kogas would import 7.5 million tons of gas per year for 30 years from 2015.

Under the plan, the pipeline would be created by extending an existing Russian pipeline that currently links Sakhalin, Khabarovsk and Vladivostok into the Korean Peninsula. In June 2009, Kogas and Gazprom agreed to conduct a study on the extension.

For Seoul, the deal is expected to cut the cost of importing gas from Russia, currently via sea, by two-thirds. The impoverished North is expected to earn around $100 million of hard currency per year as a passage fee.

The deal could also boost bilateral ties between the Koreas, still at odds over two military provocations blamed on the North last year and the breakup of an inter-Korean tour program at Mount Kumgang in the North.

President Lee Myung-bak said last Thursday that the gas pipeline deal could progress more quickly than initially expected. It is highly possible Lee will meet Medvedev in November.

By Moon Gwang-lip []

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