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Gas pipeline from Russia to South Korea is still possible

Construction of a natural gas pipeline from Russia to South Korea is still possible despite obvious difficulties in its implementation and the development of new Russian LNG projects aimed at Asian exports, President Vladimir Putin said Tuesday. Russia is actively developing LNG projects, including in the northern Yamal Peninsula and in its Far Eastern regions, in the proximity to South Korea, but supplies of pipeline gas to this Asian country are also possible, Putin said in an interview with South Korea’s KBS, broadcast by state-run Russian 24 TV network. One of the option to organize pipeline gas supplies is to build an onshore transportation route via the North Korea, « which is safer and cheaper if put aside problems of political nature, » he said. « If the two Koreas agree [on the project], it would be an ideal scenario, » Putin said. Construction of an offshore pipeline « is also possible but this is not an easy project, » he said. Putin added that a gas pipeline can be built only on the condition that the investments into the infrastructure would be secured by guaranteed purchases of gas volumes and pricing will « be clear and fixed for long term. In this case, we’ll need to sign long-term contracts, » he said. In mid-2012, Gazprom said it has dropped plans to build an offshore gas pipeline to South Korea, claiming the project is too expensive but the discussions were ongoing over the onshore pipeline. Gazprom and South Korea’s Kogas first agreed to a 30-year supply of up to 10 billion cubic meters/year of Russian gas in 2008, with the startup marked for 2015. Talks, however, stalled over North Korea’s controversial nuclear program but intensified after 2010, when Gazprom and Kogas agreed to begin commercial talks on the deal, with start of delivery rescheduled for 2017. Separately, Putin invited South Korea’s companies to participate in shipbuilding projects in Russia’s Far East. « We would like to revive shipbuilding cluster in [Russia’s] Far East and have been in talks with our South Korean partners for long. Various problems have hindered practical work, although we had thought it was just about to start, » Putin said. « We know high competence of our South Korean friends in the sphere of shipbuilding, » he said. « I would like those projects to be realized, including with participation of the South Korean companies. » Russia is planning to develop the shipbuilding cluster on the basis of the United Shipbuilding Corporation to build various types of vessels, including that to be used for development of offshore oil and gas fields and navigate through the Northern Sea Route. « Preliminary estimates show that we could need 512 ships worth a total value of Rubles 6.5 trillion [more than $195 billion] over the period to 2030, » Putin said in late August, when speaking at a government meeting on developing shipbuilding in Russia. Major Russian companies such as Rosneft, Gazprom and Sovkomflot have been placing orders for vessels through to 2030 and « our shipbuilders will need to make their best possible efforts to fight for these orders and turn them into real contracts, » he said then. Russian companies are ordering new vessels at foreign shipyards, including in South Korea. Russia’s biggest oil producer Rosneft is likely to take part in the shipyard project.