Russia will build a branch pipeline to transport oil to China from eastern Siberia before completing the main pipeline catering to the Japanese market, Russia's industry and energy minister said Tuesday.
Viktor Khristenko, scheduled to visit Japan this weekend, made the remarks during a meeting with the Japanese media in Moscow.
Russia's decision to prioritize construction of the China-bound branch pipeline is a setback for Japan, which has been lobbying hard to have a 4,180-km route built between Taishet in eastern Siberia and Perevoznaya, near Nakhodka in the Russian Far East.
The project, along with Toyota Motor Corp.'s plan to build an automobile assembly plant on the outskirts of St. Petersburg, have become key bilateral issues before President Vladimir Putin's possible visit to Japan later this year.
Khristenko also said Russia plans to invite foreign investors to bid for the rights to develop untapped oil fields in eastern Siberia, apparently indicating Russia needs financial help from Japan and other sources to build the pipeline.
Russia will build a pipeline between Taishet and Skovorodino near the Russian-Chinese border in the initial phase of the pipeline project, then build the China-bound branch, Khristenko said.
Skovorodino is midway on the 4,180-km main route.
Asked about the prospective Toyota plant, Khristenko said Russia plans to significantly cut tariffs for imported auto parts on condition that Toyota will fully procure parts in Russia within eight years of the plant's opening.
Russia announced in December that it would build the pipeline on the Japanese-proposed Pacific route.