Pipeliners

IRKUTSK, September 21 (RIA Novosti) - Gazprom [RTS: GAZP] expects the construction of a natural gas pipeline connecting Siberia and China to cost $4-5 billion, a member of the Russian energy giant's management committee Thursday. The Altai gas pipeline is considered the principal route to connect natural gas deposits in West Siberia with provinces in western China through the Republic of Altai, which is three time zones east of Moscow. The Russian concern will also supply gas via a route from Russia's Far East. Supplies along both routes will total 68 billion cubic meters a year and are expected to start in 2011. "According to preliminary estimates, the cost of the Altai gas pipeline construction will be $4-5 billion," Bogdan Budzulyak told journalists. He said the cost largely depended on the pipeline route. "If there is a mountain or a river on the gas pipeline route, it significantly affects its cost," he said. Budzulyak, the head of the department of gas transportation, underground storage and utilization, said Gazprom had looked into various possibilities, including building the pipe via neighboring Kazakhstan. But he said the route to energy-hungry China through Altai was the "most realistic." The official said the energy giant, the world's third largest company by capitalization, was trying to avoid routing export pipelines through transit zones because this would incur payments to other countries and create additional risks. "We are trying to minimize risks to ensure reliable supplies unaffected by politics," Budzulyak said. During a price spat with Ukraine in January, Russia briefly cut off gas supplies to its neighbor, and later Gazprom accused Ukraine of siphoning off Europe-bound gas during the halt in supplies. The situation aroused concerns in Europe about Russia's reliability as a gas supplier. Russia is already a major supplier of crude to the world's second largest consumer, but gas supply routes from Siberia to the Chinese cities of Daqin and Shanshan remain on the drawing board, as does another route from the offshore Sakhalin energy project to the northeastern city of Harbin. China is seeking to double the share of natural gas in its total primary energy balance to 6% by 2010.