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Japan makes deal with Russia to reduce reliance on Middle East oil

By Yasuhiro Takizawa, The Yomiuri Shimbun –

TOKYO—An agreement between Japan and Russia to jointly develop a Siberian oil field is expected to accelerate expansion of crude oil procurement from that country and help diversify Japan’s supply of energy resources.

Japan relies on the Middle East for more than 90 percent of crude oil imports.

Japan Oil, Gas and Metal National Corp. and Russia’s Gazprom Neft announced last week they would develop an oil field in eastern Siberia, a region believed to have abundant natural reserves.

The oil field is expected to yield of tens of thousands of barrels a day, is equivalent to 1 to 2 percent of Japan’s total crude oil imports.

The Japanese company is conducting research in other parts of eastern Siberia with the aim of development agreements with other companies.

A pipeline connecting the eastern Siberian area with Russia’s Far East will be completed in the fall.

In past joint projects, Japanese companies have not had much luck.

Japanese firms in the Sakhalin-2 project, which started producing natural gas in 2009, secured only a 22.5 percent stake.

In a project to develop Iran’s Azadegan oil field, which has one of the world’s largest oil reserves, the Japanese side initially took a 75 percent stake.

However, Japan had to withdraw from the project after the international community strengthened sanctions against Iran over its suspected nuclear weapons development program.

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