China's quest for Russian oil in doubt after arrest of Putin rival

Special to World
Thursday, November 6, 2003

The arrest of Russian oil executive Mikhail Khodorkovsky has thrown into question a Russian-Chinese oil deal that calls for piping crude oil from Siberia to Beijing.

The head of the Russian oil giant Yukos, Mikhail Khodorkovsky resigned from the company on Nov. 3, more than a week after being jailed on charges of fraud and tax evasion. AP Photo/Ivan Sekretarev

The pipeline is the current focus of a covert political and economic battle for energy resources. The battle is being waged by China and Japan over the Angarsk oil fields near Lake Baikal in eastern Siberia.

The Chinese are desperate to get the Angarsk oil because of their growing need for fuel, which some experts view as reaching near-crisis proportions.

Japan, however, is vying for the Angarsk oil and has offered Russia financial incentives to build the pipeline due east of Angarsk and closer to Japan.

China reached a deal with Khodorkovsky's Yukos oil company to build the pipeline along a route 1,500 miles to China.

Intelligence sources said Khodorkovsky's arrest was related to Russian President Vladimir Putin's concerns that Khodorkovsky or a surrogate would challenge Putin for political office.

The Japanese pipeline project would go 500 miles to the Pacific Ocean, where it would be closer to Japan and other world markets.

Oil industry analysts say there is not enough oil at Angarsk to meet the needs of both China and Japan.

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