On September 1, President Vladimir Putin launched the construction of the eastern section of the Russian gas transmission system (GTS) connecting the West Siberian GTS with the Sakhalin branch. Thus, after 2018 almost all of the economically important territory of the Russian Federation will be covered by a network of main gas pipelines. This is indeed excellent news. One cannot but recall the words of Vladimir Lenin on the universal electrification of Russia as the most important task for the Soviet authorities. President Putin will complete the gasification of the country and provide it with new incentives for economic development. The Russian president announced: “This project will provide an opportunity not only to export Russian gas, but also to develop the gasification of the eastern regions in our own country, including the Far East and Eastern Siberia.”

From now on the Far East will be connected to Greater Russia not only by a network of railways, but also by a network of highways (construction completed recently) and by powerful energy lines (gas and electric lines).

During the first stage of constructing “Power of Siberia”, the “Yakutia-Khabarovsk-Vladivostok” branch will be constructed, during the second stage the “Power of Siberia” will be connected to the Irkutsk center for gas separation and gas processing, based on the premises of one of the largest chemical plants. The total length of the gas pipeline will be about 4000km (Yakutia-Khabarovsk-Vladivostok – about 3200km; the Irkutsk region-Yakutia – about 800km), total capacity equals 61 billion cubic meters (bcm) of gas per annum. The GTS route of “Power of Siberia” will be constructed along the highway of the ESPO pipeline. This will permit to minimize infrastructure and energy costs. The resource base of the project will be the Chayandinskoye field.

The export branch of the “Power of Siberia” pipeline will depart for China in the area of ​​Blagoveshchensk. From Blagoveshchensk the branch connecting “Power of Siberia” with the Sakhalin-Vladivostok GTS will pass through Birobidzhan. A high-power LNG plant is planned to be built near Vladivostok. The first line with a capacity of 5 million tons per year should enter into operation in 2018, and the total design capacity of the plant will be 15 million tons per year.

Liquefied natural gas (LNG) has a number of potential advantages, especially in terms of export to countries where gas pipelines, for one reason or another, cannot be extended. For instance, Japan meets its demand for natural gas almost entirely due to LNG (97%). The country receives LNG from producers in the Pacific region (Australia, Brunei, Indonesia and Malaysia) and also from the Middle East (Oman, Qatar and the UAE).

The second largest importer of LNG in East Asia and the third country in terms of terminal capacity is South Korea. Major suppliers include Qatar, Indonesia, Malaysia and Oman.

India could also become a potential consumer, there are two terminals in the country: Dahej (capacity – 9 billion cubic meters per year, Petronet) and Hazira (capacity – 4 billion cubic meters per year, Total/Shell). Taiwan also imports LNG and in 2005 the island nation concluded a 25-year contract with the Qatari based project RasGas 2 (3 million tons per year). Recently Thailand has also started to import LNG. In the near future, several other countries in the Asia-Pacific region could start to import LNG including New Zealand, the Philippines and Singapore among others.

According to the International Energy Agency, demand for natural gas by 2035 will grow by 48%, which would put it in second place after crude oil in the global energy market. The LNG sector could become a major direction for world trade in the gas production sphere. A confirmation of this statement is the volume of gas trading, which during the past 10 years has increased by 45%; LNG trade has more than doubled. Shell Corporation predicts an increase in the share of LNG from 10% today to 15% of global gas supply by 2030. Transportation of liquefied gas is beginning to compete with gas pipelines at distances of more than 2500km. This will allow to expand the geography of LNG.

At present the only existing LNG plant in Russia is Sakhalin-2 with a total capacity of 9.6 million tons per year. In various stages of implementation are several large-scale projects such as Vladivostok LNG, Baltic LNG, Yamal LNG, Pechora LNG and several others. However, before 2019 the new volumes of LNG from Russia will not appear on the world market. In the short term the most important plant is Vladivostok LNG, as well as the ROSNEFT project where the total LNG volume has already been contracted.

What are the reasons for the sustainable global growth in gas demand? J.P. Morgan analysts have highlighted a number of prevailing factors:

  - the desire of countries to diversify fuel sources for energy safety;

  - the departure from the use of non-ecological coal;

  - the negative attitude of a large part of the population to nuclear power plants.

The largest LNG exporting countries are: Qatar – 49bcm, Malaysia – 30bcm, Indonesia – 26bcm, Australia – 24bcm, Algeria – 21bcm, Trinidad and Tobago – 20bcm. The main importers of LNG are: Japan – 86bcm, South Korea – 35bcm, Spain – 28bcm, France – 16bcm , USA – 15bcm, India – 13bcm and China which has had gas pipelines joined from Turkmenistan, Kazakhstan and Uzbekistan.

As a result of concluding the recent pipeline contract with China, Russia reduces its dependence on gas supplies to Europe. On the other hand, the enhancement of diversification of gas production in the LNG direction allows Russia to open up new energy markets and thus to further increase the stability of the country’s economy. Such things are not done instantly, and they can in no way be counted out.

Gazprom’s strategy should be acknowledged as being the most effective. Plans are not going to end with the eastward direction leading to China alone which accounts for an enormous market capacity; however, it is still only one country. Gazprom is planning the development of another branch in Primorsky Krai, in the direction of the sea in order to ensure sufficient resources for LNG production capacity. In the long term this implies the delivery of LNG to Japan, South Korea, Taiwan, India and other countries.

The establishment of the Hunchun Border Economic Cooperation Zone (ECZ) is not news and already has a long history; however, the development of this project always attracts certian interest. Here the economies of virtually all countries in Northeast Asia are interwoven: China, Japan, South Korea, the DPRK, and the Russian Federation. The Hunchun project interests Mongolia as well, which is landlocked.

The Chinese Government and the leaders of the Jilin province initiated the establishment of the ECZ. Four sectors are planned to operate in the zone: the PRC-DPRK sector, the PRC-RF sector, etc.

According to decisions by the National People’s Congress of the PRC, the ECZ enjoys financial, customs and tax benefits, benefits in distribution of the manufacturing sector and investments, in use of land, in the construction of infrastructure, etc. Experts believe that the ECZ will become a powerful transportation, trade and logistics center in international trade in Northeast Asia.

Of particular interest to China is the forward-looking transit port Zarubino located in Troitsa bay (Russian Federation). It allows the Northern provinces of the PRC to substantially accelerate delivery of goods to Japan. According to Hunchun Mayor Cui Jin, use of the port Zarubino reduces transport time of packages from China directly to Japan several times over. From Hunchun to Zarubino is only 70 km.

The port has a vast territory, a large cargo area, and 840 meters of quay wall. All of this creates the conditions for high-speed processing of goods, and excludes the possibility they will sit idle. If one is to develop a transport chain in China, the nearest port, Dalian, is by car almost one thousand kilometers away. Dalian itself is very overloaded, and moving packages could take two days or a month. No one is interested in waiting that long.

Development of import-export trade through Zarubino creates a significant basis on which to develop the ECZ. And the port authority and the government of the Chinese province of Jilin have one goal — to increase traffic on the route through quality service.

One of the main advantages of the Zarubino port is its railway connection: from the Transsiberian through Ussuriysk, from the PRC (Hunchun) through Kraskino and the DPRK through Hasan. As is well known, recently, as part of the reconstruction of the Russian Railway’s Trans-Korean line, the Hassan – Rason (DPRK) railway was restored. The Rason port can generally accommodate the transshipment of bulk cargo (especially coal); however, the construction of a container terminal here is planned in the near future that can accommodate 400,000 twenty-foot equivalent units (TEUs), a standard-size container, a year.

The Rason port, according to the agency Vostok-Media, has good prospects to become a reliable platform for cooperation of the Russian Railway with North and South Korea. Rason is notable for its advantageous location: it is located in a bay which is closed-off from the sea by islands that provide security of goods. Natural depth on the approach to the port reaches 20 meters; that allows it to take on a heavy-duty deadweight cargo capacity of up to 12,000 tons. Navigation can be done in winter as well; the port will not freeze.

The Chinese and Korean business community is pleased with the launch of movement along the Trans-Korean line. Businesspeople believe they will be able to send their products on this route to Europe faster than by sea. As commentator Anastasia Barannikova asserts, if transportation of a standard 20-foot container from Busan in South Korea to Moscow by sea costs $1232, shipping the container by rail through Pyongyang (DPRK) and on the Trans-siberian line will cost $889. Another advantage of the land route is speed. Today crossing the distance from Asia to Europe by sea takes 35-40 days. The railway line allows delivery of goods in only 17-20 days. Shipping a freight container from South Korea to Finland takes about 14-16 days, which is significantly less than 40-45 days carriage over the Suez Canal and Gibraltar.

What’s in store for Zarubino?

A survey by the secretariat of the Extended Tumangan Initiative (Beijing) in 2010 of potential users of the port allows us to make the following prediction. By 2030, at 100% capacity, the port could be trasshipping 90-100 million tons of cargo, including containers (6.5-7.0 million TEU).

Today the situation is this: the group “Summa”, the main shareholder of the company FESCO, agreed with three Chinese companies on the transshipment of goods to the Zarubino port, still under construction, to Primorye. They are a Jilin Province grain company (10 million tons), the company “Henda,” (on the transshipment of 5 million tons of water with possible growth in the volume to 40 million tons by 2025), and a Volkswagen assembly plant, the Chanchun automobile factory on the import of up to 1 million cars and 40 thousand TEU of car parts a year.

Head of port construction Andrey Zagorsky claims that contracts for the transshipment of 80 million tons of cargo per year have already been sealed.

North-Chinese companies are particularly interested in expanding Zarubino’s opportunities, which, in addition to exports, intend to transship their goods through the port to China’s southern provinces as well.

By 2018, four terminals should be completed and operational in Troitsa bay (Vladivostok): grain, container, general and bulk cargo, as well as means of transport. The total cost of the project was estimated in May of this year at 40 billion rubles. “Summa” will build a large part of the port at their own expense. The investment amount in the future could significantly increase, as volumes which Chinese companies were ready to transship in the initial period of the project’s development are a much larger currently.

In the future, based on Zarubino port, a center of transit traffic can be created between the countries of the Asian Pacific and the EU for a wide range of goods: containers, automobiles, and general cargo.

Konstantin Penzev, historian and writer, commentator for the online magazine “New Eastern Outlook”.

The Trans-Siberian was originally built to serve as a link between the European part of Russia to Siberia, and then on to the Far East and had primarily a military strategic importance, and then economic. Construction began on the Baikal-Amur line development of East Siberian and Far Eastern routes of the Trans-Siberian before the Second World War, but due to circumstances, extensive construction has gone on here since 1974.

BAM was constructed as a promising railway system for subsequent industrial development in areas of East Siberia and the Far East that are rich in mineral deposits and resources. In the 90s, when industrial development in the Russian Federation was virtually collapsing, BAM lost its value (temporarily).

Presently, according to “Strategy 2030”, the BAM line will be transferred to serve as the main route for freight traffic, while the Trans-Siberian line will serve as the route for container and passenger traffic. The main objective in the modernization of the Trans-Siberian railway will be to increase its high-speed capacity and the acceleration of its transport connections. In the future, this enormous railway network connecting East Asia (China, North and South Korea project) and the EU can be regarded as one of the opportunities for diversification of marine transit trade between East Asia and Europe.

With regards to the BAM line, President Putin said: “In the mid-2000s … it became obvious that there was a high demand for BAM.” Carrying capacity for the line is currently approximately 16 million tons, but due to infrastructure limitations there is an acute shortage of freight capacity and carrying capacity. It is predicted that by 2020 the volume of freight traffic along the BAM line will increase three times and passenger traffic will increase by 18%. The prospects for this railway line are associated with the construction of new sections of line towards Yakutia where there are mineral deposits and the development of ports in Vanino and Sovetskaya Gavan.

At the moment, the transport balance of the BAM line is dominated by the export of coal, (South Yakutia basin, in particular Nerungri) of ore (Korshunov deposit) and of lumber products (centers in Ust-Ilim, Bratsk and Komsomolsk-on-Amur), in parts, transit to Vanino- Sovgavansky junction there is the exact same specification of goods.

In the future (according to the federal website protown.ru) by 2020, due to increased production in both existing commercial enterprises and in addition to the creation of new industries, the growth in the volume of product export will increase 1.9 times.

Thus, in the period leading up to 2020, it foresees the development of Elga coal deposit, the GOKov ore deposits at Kuranakhskoe, Chiney and Bolshoi Seyim. On the Elga coal deposit base there are plans to construct a section capacity of 30 million tons per year with a processing plant, allowing the administration to bring coal concentrate and product to 22 million tons. The development of this deposit requires the construction of a railway line stretching 320 km adjacent to the BAM line to the Ulak station.

In addition, to increase the freight load along the BAM line requires the Kuranakh deposit titanium-magnetite ore in Tyndenskom near the Amur region which proposes the construction of a mine and processing plant for the production of ilmenite concentrate, titanomagnetite concentrate and with the subsequent construction of a facility at Tynda for processing titanium dioxide. The development of the titanomagnetite deposit at Bolshoi Seyim involves the extraction of ore with the further processing of titanium and magnetite concentrates. Chiney and Udokan copper-platinum ores will not only ensure the production of copper in the country, but also silver, platinum, gold and other rare and precious metals. The BAM line will also increase the load of the Komsomolsk Oil Refinery “NK- Rosneft”.

The roadblock in the BAM line’s trade potential for export to the Asia Pacific countries is limiting infrastructure on the route in the ports Vanino and Sovetskaya Gavan, namely, the intersection of the railroad of Sikhote-Alin in the region of Kuznetsovsky pass. At the moment, due to this section of the railway (with a grade rise of 27%) on the Komsomolsk-Sort-Toki route, the weight norm is restricted to 3600 tons. Currently the line provides transportation for cargo in the ports of Vanino and Sovetskaya Gavan in the amount of 8.10 million tons per years with 280 km in the direction already in 2006 there was no reserve carrying capacity. Overcoming this bottleneck will significantly increase the export potential of BAM.

The Ministry for Economic Development of the Russian Federation has received an application of Russian Railways to the Investment Fund for a project on the reconstruction of Oune – Highland Kuznetsovsky and the construction of a new tunnel at Komsomolsk-on-Amur – Sovetskaya Gavan. The project will help remove infrastructural constraints in the transport of cargo, including Elga coal to the ports of Vanino and Sovetskaya Gavan, and later on to Asia-Pacific countries.

So, the BAM line is an infrastructure project fulfilling the requirement for the transport of cargo, and, consequently, a significant increase in the exploration of adjacent regions. It serves in the creation of industrial enterprises and railway network in addition to other necessary infrastructure; it attracts labor, the organization of social life, as well as the creation of appropriate quality life of the workforce. All this is possible only to resolve only with the active participation of the state and the attraction of private capital, both Russian and foreign.

Constantine Penzev is a writer and historian and a columnist for the online magazine “New Eastern Outlook”.

On July 6^th, 2014, Shinzo Abe stated that Japan will create a special ministerial post. This person will be responsible for issues relating to the implementation of collective defense, the right to which the country received following the recent government acceptance of the corresponding resolution.

The Japanese government’s decision has one limitation – the Land of the Rising Sun’s armed forces can be used abroad only in collective operations, that is, only under the leadership of the U.S.’s high command, on its orders, and, it is possible, as a “primary expendable material.” It would be the height of folly for the U.S. government to approve the use of the descendants of Amaterasu in overseas operations under any other conditions.

American Minister of Defense Chuck Hagel welcomed the Japanese government’s decision. In a statement the other day Hagel said that the “new policy regarding collective self-defense […] will enable the Japan Self-Defense Forces to engage in a wider range of operations… .” According to him, this will make the U.S.-Japan alliance even more effective. I should think so! Now it’s possible to send the sons of Yamato even into Iraq and Afghanistan, and most importantly — it will be paid for by Japanese taxpayers.

However, that’s not all. In the Land of the Rising Sun, there is a very unfavorable demographic situation, even compared to European countries. This is well known. By 2060, the population of Japan may be reduced by up to 87 million people, 40% of them being retired. As to the accident at Fukusima’s impact on the demographics of the Land of the Rising Sun, we have yet to see. However, two or three military expeditions to somewhere in the Middle East will not at all make the Japanese nation healthier or more populated.

What are Japan’s military capabilities?

If the PRC (the world’s most powerful manufacturing economy) spent $119.5 billion on military expenses in 2013, then Japan in the same period spent $51 billion, with a multi-year economic recession and a massive removal of industrial capital abroad.

While Asian public opinion resents and remembers numerous war crimes by Samarai warriors, the Russian government is conducting active construction on the Iturup and Kunashiri islands. By 2015, a total of 150 objects should be operational. “This will be modern, fully self-contained military sites with a well-developed social infrastructure. In addition to military facilities, the projects provide for the construction of residential houses as well as socially significant cultural, leisure and sporting institutions”, a message by the East Military District stated. In addition, in the next two years Russia’s Pacific Fleet will grow by two “Mistral”-type helicopter carriers; Washington’s made a real scandal over the delivery of said helicopter carriers to president Hollande. But what else can the Kremin do?

The Peace Treaty between the Russian Federation and the Land of the Rising Sun has not yet been signed. It’s very curious that this circumstance for some reason concerns the Russian side more.

Why doesn’t this fact worry the descendants of the Samurai? Have they so completely acquired the spirit of Lev Tolstoy’s books that they are 100% sure the kind Russian soul will infinitely swallow all Japan’s militaristic steps? Yes, the Japanese government has a large friend across the ocean, which has been instilling in Tokyo a certain optimism. But there is a question here. If Tokyo is so confident in the unlimited power of their sovereigns from Washington, then why on earth does it ask the White House to confirm allied guarantees almost every time any Chinese mine-sweeper passes by the Senkaku archipelago?

The world itself is changing, but only the answer to the question “what do the gentlemen from Washington wish?” is not changing; as has been systematically demonstrated by Japanese prime ministers.

What was the response from some East Asian countries to Abe’s cabinet’s decision? China stated that the decision by the Japanese Government, which for the first time since the Second World War will allow Japanese troops to use force abroad, “could once again lure the country into a bloody nightmare”. This came in a statement by the agency “Xinhua.”

On 5^th July, PRC chairman Xi Jinping, while visiting the Republic of Korea, in his speech to students at Seoul State University raised some of the historical problems between Japan and its neighbors. He said that Japan under the flag militarism waged a ruthless war against China and South Korea, annexed the Korean peninsula and occupied part of China, so the people of the two countries underwent terrible suffering. Xi Jinping stressed the joint actions by the two countries against militaristic Japan, pointing to the fact that both peoples shared the same fate and helped one another as much as they could.

If the DPRK’s position coincides with China’s position on some of the decisions by the Land of the Rising Sun (as evidenced by regular launches of North Korean short-range missiles in the sea of Japan), the United States’s military control over the Republic of Korea prevents it from joining the anti-Japan alliance: there’s an American military base in the RK.

Xi Jinping’s visit is not, of course, an invitation to South Korea to join a military alliance, but, at least, it is a clear demonstration of good feelings and gives food for thought to the ruling classes of the RK.

In conclusion, throughout all the feverish bustle of the building of military and political blocs, all the participants of the Pacific squabbles and first and foremost Japan would be better off focusing on peacefully settling long-time regional problems to the benefit of their peoples, rather than working on puffing up military agitation.

Constantine Penzev is a writer and historian and a columnist for the online magazine “New Eastern Outlook”.

As for the route from the Mediterranean to the Black Sea, it passes through the Bosporus and Dardanelles straits and closes at the largest cargo port, Odessa, Ukraine, Hence, here quite a trivial question arises: why President Yanukovych need to fly in December of last year to Beijing in order to negotiate with the Chinese on the construction (the latter acted as an investor) of a deep sea port in the Crimea, which at the time was still a part of Ukraine?

On December 5 of last year Ukraine’s previous government signed in Beijing a memorandum between the companies, Kievgidroinvest and BICIM (PRC). Then on December 18, President Yanukovych wanted to go to Moscow, but the visit was interrupted due to the growing unrest in Kiev at the “Maidan,” which had at that time had no orange color, but rather was a distinct brown with a Russophobe smell to it.

Then the rather infamous events occurred, namely a coup, the illegal seizure of power in Kiev by the fascist thugs and incitement to civil war in the east. And while the terrorists were raging in Kiev terrorists jumping incessantly to prove their racial purity, the Crimean republic quietly separated from Ukraine, declared its independence and was reunited with Russia.

Thus, the question of building a deep-water port in Crimea by China has been for a while up in air due to change of ownership and problems at the newly opened, since 1945, “Eastern Front”.

Nevertheless, this does not remove the one question: why would China want to trade through the Crimea, if the same thing can be done via the port of Odessa? An explanation from Ukrainian media, (questionable source of information) at the time it was believed that Chinese merchant ships would unload in Crimea Chinese goods and would then be loaded with Ukrainian grain. And what prevented Ukraine from doing the very same, for example in Odessa, was never explained. Then, as it turned out, they perceived that Ukraine was an ancient part of the Great Silk Road and decided today to restore their “historical significance”. There is a drop of truth in that, but in times of Mongol khanates and its control of the Silk Road, Ukraine did not exist, but Crimea really was one of the marine terminals of the Silk Road. The northern route of the Silk Road went from Central Asia (Samarkand, etc.), skirting the Caspian Sea, passing through Malii Sarai heading in the direction of the Crimea. Here goods on the coast were accepted by Genoese merchants (from which they amassed huge fortunes by trade with the Hordes) and transported it to the European markets.

On June 19 of this year, Kommersant FM informed the public that a Chinese company, China Communications Construction Company, will build a bridge between Kerch on the Crimean peninsula and Taman in the Krasnodar region. An investor is willing to carry out calculations in rubles and make long-term commitments.

This issue was discussed during the recent visit of Vladimir Putin in Shanghai, this time it was mentioned by the head of Avtodor, Sergei Kelbakh. According to him, Chinese engineers have already visited Kerch, and on June 18, CCC-Company submitted a proposal of the Russian delegation headed by the Minister of Transport, Maxim Sokolov. The Chinese investor proposed two options for the project, a combined road/railway bridge or a tunnel.

It is expected that the Crimean side will be built a 17 km railway and about a 10 km road; next to Taman a 40 km long road and rail system will be built. According to the correspondent of Kommersant FM, Yana Lubnina, a bridge across the Kerch Strait proved to be one of the key themes discussed in Shanghai. Obviously, it will connect the future deep-sea port in the Crimea through Krasnodar with the Trans-Siberian railway. Next there are two options: branch to China through Kazakhstan (member of the Customs Union) and a route along the Mongolian border up ending in Vladivostok.

In Shanghai, as we know, a number of decisions relating to increasing the capacity along rail and road routes of China-Russia. Russian Railways and China Railway Corporation have agreed to develop infrastructure on rail and road traffic. The companies plan to develop the appropriate infrastructure at border crossings and the approaches to them to increase the capacity of railways, as well as increasing the volume of international traffic between countries and in transit through their territories.

From the 18th of June to the 20th, Sochi hosted the International Forum “Strategic Partnership1520”. The forum program was formed around the thesis of the need for market development based on a balance of interests between countries forming the perimeter of the East-West corridor and the three main pillars of the railway industry: transportation, infrastructure and rolling stock.

The agenda of the plenary discussion included the problems of the development of international transport corridors of the EU-1520- Asia-Pacific Region. The railway project developments that were discussed included Vienna – Bratislava – Kosice – Kiev – Moscow – Komsomolsk-on-Amur – Nysh – Yuzhno-Sakhalinsk – Cape Crillon – Wakkanai (Japan); Rotterdam – Moscow – Kazan – Novosibirsk – Krasnoyarsk – Irkutsk – Khabarovsk – Vladivostok – Busan (Republic of Korea).

So, the main problem for today’s industrial leader of humanity, i.e. China, as was already mentioned, is to diversify energy supply routes as well as trade routes for the delivery of finished products. Alas, the policy of the United States, controlling the main maritime trade routes and straits, is now increasingly anti-Chinese and less adequate.

Diversification of energy supplies to China in many ways is close to a resolution, as evidenced by the number of agreements in the field of oil and gas that were concluded during Putin’s visit to Shanghai. As for diversification of trade routes, there are two options in consideration today, the Northern Sea Route and road and rail routes based on the capabilities of the Trans-Siberian Railway.

Under these conditions, namely the construction of a deep-water port in the Crimea, the Trans-Siberian project is included as part of the development.

Constantine Penzev is a writer and historian and a columnist for the online magazine “New Eastern Outlook”.

It should be recognized that although Russia has no need to return to Asia (she has always been there), but as it turns out, Russia has its own “Asian Deal” and it is being actively discussed in the Asian as well as in the Chinese media. It differs greatly from a pronounced military-strategic “course” of Washington.

China Daily claims that the agreement between the Russian Federation and China for the supply of natural gas is a peaceful, creative direction of Russia’s cooperation with countries in Asia and will have significant long-term consequences for the entire Asia-Pacific region. Meanwhile, the current agreement covers only until the eastern branch of the main gas pipeline with a design capacity of 38 billion cubic meters of gas. Under the terms of this project, a pipeline will be constructed “Strength of Siberia” based on the resources of Chayandinskoye and Kovykta fields (total reserves 2.7 trillion cubic meters). In the region of ​​Blagoveshchensk and Dalnerechensk the plans include making allocations for China and the pipeline ending near Vladivostok. Here Gazprom and a consortium of Japanese companies plan on constructing a large LNG (Liquefied Natural Gas) factory. The end market would be countries in the Asia-Pacific region. Thus, the project will not depend solely on Chinese conjuncture. The commissioning of the first stage of the pipeline is planned for late 2017.

It is also expected that the pipeline gas (via the western route) to China will be delivered through the pipeline “Altai” from the compressor station “Chuy”. The planned volume of supply will be 30 billion cubic meters. Starting gas is expected at the end of 2015.

The second landmark for the Russian Federation East Asia is the Republic of Korea, which Gazprom would not refuse to supply with pipeline gas. On the road to this project initiative is North Korea, which has some economic problems; however nothing prevents them from making a decision. According to China Daily, over the last two years, Russia has settled all commercial issues with the North Koreans, including trade debt and unpaid loans. As a result, Russia and North Korea have set the base for a significant improvement in economic relations. Thus, Gasprom and the Ministry of Energy of North Korea reached agreements for the construction of a pipeline that will pass through the territory of North Korea to supply gas to South Korea. In addition, there is an accompanying project to build a modern railway line from Kazakhstan through Russia to North Korea, with connection to the Trans-Siberian Railway. The later will allow for high-speed rail from Kazakhstan to the European markets.

The third landmark in East Asian markets for Russia is Japan, whose demand for natural gas is very high. The Government of the Rising Sun’s policy views on this question is quite reasonable, aiming for the maximum diversification of imports. Its pricing policy, in contrast to the pricing policies of the Chinese government, is not so rigid. The Japanese are most interested in guarantees and the security of supply. Meanwhile, Russia can supply only LNG to Japan, since the laying of pipeline Sakhalin-Hokkaido inefficient both economically and technically, as per the head of Gasprom, Alexey Miller.

Russia’s economic interests towards East Asia are entangled with political and military-strategic interests of other countries; and foremost is China. China would like to see Russia as a friendly country, in so much as that would allow it to reduce the cost of the land contingent of armed forces and give more attention to its navy and missile defense. Why is that?

It is quite clear that China has significant political influence in East Asia, and it aims to maintain it and even strengthen it. But it is impossible without a strong aircraft carrier fleet to solve strategic problems in the region and confront the U.S. Navy. Only in this manner can China ensure the safety of its maritime trade routes. Japan doesn’t possess such a possibility, because after World War II Japan was forbidden to have a strong navy and she will always be dependent on the U.S. Navy.

Naturally, Chinese attempts at increasing its influence in the region warrants from Washington a sharp, negative reaction and works to rally its allies in East Asia, for example, the very same Vietnam, which recently held massive anti-Chinese riots over oil shelves in the South China Sea. China does not think retreat, but carries itself boldly. Thus, recently, a Chinese ship deliberately collided with a Vietnamese fishing boat 30 kilometers south of the established Chinese oil drilling platform. The Vietnamese fishing vessel as a result of the collision sank.

Literally within a few days, a Russian-made Chinese Su-27 flew within a dangerous distance, 30-50 meters from a Japanese YS-11 aircraft in an area where the two countries declared air-defense zones intersect.

On the 30^th of May, Japanese Prime Minister, Abe communicated Japan’s willingness to assist countries having grievances with China, particularly Vietnam. He is prepared to provide patrol ships, military personnel and weapons.

China, in its turn, relies on North Korea. The North Koreans have a very powerful army and some nuclear missile potential. Pyongyang traditionally holds Tokyo with a high degree of hostility and is never against heightening tensions in northeast Asia.

Russia must be very careful in conducting its relations with countries of East Asia and try every possible way to emphasize the primacy of economic interests over political and military, strategic ones. Particularly important in this case, is good-neighborly relations with China. To contrive some kind of special relationship with Japan hardly makes any sense, in as much as it is controlled by Washington’s foreign policy.

A Moscow- Beijing relationship is not rules by the formula “the enemy of my friend is my enemy”. Even if the very same Vietnam intends to arrange Vietnam dispute with China because of oil drilling in the region of the Paracel Islands, it should be their strict private issues that should neither affect the Russian-Vietnamese relations or Sino-Russian relations.

The main problem in the region is the behavior of the White House, concerned about their exclusive right for world domination and the belief that they alone are entitled to the uncontrolled use of force anywhere in the world. Whether gypsies fought with Caucasian traders in the market in the Belarusian city of Zhdanovichi, or masked men captured an administrative building in a Ukrainian bank, or if a hurricane swept over Jamaica, and if some madman kidnapped a girl in Zimbabwe, everywhere there should be the American soldier, ready to restore order.

However, if were so!

Realpolitik of Washington is grazing together of peoples and of nations, Japanese and Vietnamese against Chinese, Ukrainians against Russians, Albanians against Serbs, Pakistanis against Indians and hired terrorists against the Syrians, etc. etc. etc.

It is precisely in this circumstance that Russia fits into its “Asian course”, hoping to trade effectively in the markets of East Asia and to promote peace in the region.

Konstantin Penzev, an author, historian and columnist for the online magazine “The New Eastern Outlook”.

As we well know, in March of this year, Japan joined other Western countries in enacting sanctions against the Russian Federation in response to Russia’s annexation of Crimea. The Japanese Foreign Minister said that its government is freezing their investments in Russia, (which in the best of times does not exceed Ukraine’s gas debt in favor of Russia) as well as suspending cooperation in space exploration, and in addition suspending the Agreement on the Prevention of Dangerous Military activities (which effectively means that Russian strategic flights near the country of the Rising Sun currently have no restrictions).

In so much as nobody is impressed by Japanese sanctions in Russia, the government of Japan decided to enact further measures with the hopes of strengthening them. New measures include the temporary suspension on the issuance of entry visas to 23 representatives of the Russian government, officials and others. One has only to imagine how swollen with pride several of these representatives must be to be included in such measures.

Maybe someone from this list prohibited from entry into Japan may wish to visit the Fukushima Nuclear Power Plant? Let Japan deny visa-free travel with Russia in support of this matter over Ukraine. That would be a real blow to the Kremlin.

It doesn’t seem at the moment that Russia and Japan can maintain friendly, relations, there always seems to be something preventing it, be it the island itself, or the peninsula, or rather Washington with its own interpretation of democracy.

According to the newspaper Vedomosti, Russian Railways have not been purchasing foreign rails since January of this calendar year. At the end of 2013 “Trading House Russian Railways” explored possibilities in the acquisition of Japanese Nippon Steel in 2014, but in the end decided against it. Instead of import, Russian Railways will procure rails from Evraz and “Mechel”. And as of 2013, the company Evraz began producing 100-meter tracks which have been the subject imports. An Evraz representative declined to comment on the situation. Coincidently, a representative of Nippon Steel also declined to respond to questions related to this subject, obviously he was offended.

Japan may still refuse delivery of Russian LNG (liquefied Natural Gas) and oil, whose share in total imports of hydrocarbons as of 2013 was 6.9 % for oil (per JOGMEC) and 9.8 % for LNG. Not so little, is not it? “We can diversify our energy imports with the assistance of Russia, for which we are grateful” remarked the deputy director of the Japan National Oil Corporation, Gas and Metals (JOGMEC) Daisuke Harada. And he is absolutely right, the diversification of imports or exports always means only one thing, it serves to reduce the country’s dependence on other countries.

But the refusal to accept Russian energy becomes more or less an act of vengeance by Tokyo to Russia over the whole Crimea situation. But what does the Crimea, Ukraine, or Syktyvkar for that matter actually mean to Japan? Tokyo is to Hecuba as Hecuba is to Tokyo? In Japan there are enough people who understand that the Crimea and the land of the Rising Sun are not connected by anything.

The former president of the consulting firm McKinsey Japan, Kenichi Oomae’s publicist, in an article written for the May issue of the journal SAPIO remarked, “Realizing the complexity of the situation in Ukraine, we Japanese must not shake on one horse for the American back, shouting, Russia is behaving poorly, therefore we must enact sanctions!” The Japanese government would rationally embark on the path of economic sanctions”.

Why has Tokyo embarked on the bumpy ride of sanctions? The answer is very simple. It was ordered to do so by Washington. The military and political dependence of Japan on the United States is a long and sorted history dating back to 1853/54 with a visit of squadron Commodore Perry. In Japan at that time occurred some developments, in particular, came the era of Meiji industrialization of the country (at the expense of the Anglo-American capital), feverish military construction and their first military expedition to Manchuria, Korea and Taiwan.

Japan’s importance to the United States is primarily geopolitical. She plays the role of watchdog, guarding against reaches of Russia and China to the Pacific. During the 2nd World War, this guard dog escaped and inflicted a fierce bite on its benefactor. It ended in a nuclear bombardment of civilians in Hiroshima and Nagasaki. Teach her a lesson; after which Japan became much more sensitive and responsive to the wishes of Washington.

It’s impossible to say that the White House did not tend to the needs of its faithful squire. Since the Second World War the workforce in Japan costs mere cents, the United States is actively subsidizing industrial development here and has opened American markets for Japanese corporations. The same is happening now with China, but between China and Japan there is a huge difference, and it seems that this time Uncle Sam made ​​a big mistake. Washington cannot (for quite objective reasons) control Beijing to the same extent that it controlled (and continues to do so) Tokyo.

On May 28, President Obama spoke at West Point, where he decided to share with the world his thoughts about the unlimited power of the United States and their ability to arrange the “iron curtain” for anyone. Obama said: “Our ability to shape world opinion allowed us to immediately isolate Russia. Through American leadership, the world immediately condemned the actions of Russia, the EU and the countries of the “Big Seven” joined us in imposing sanctions, NATO has strengthened our presence with our Eastern European allies … etc.

Who would have thought that the spirit of Winston Churchill would resurface in this thin son emerging out of Kenya, not born in the Southern U.S. and in general having no direct links to the cotton plantations? Naturally, the descendants of the Japanese samurai had to join the sanctions instigated by Washington to further isolate Russia, although, it should be understood that in them there isn’t the slightest need.

Strictly speaking, no one else has a similar necessity, and even with these very Americans themselves, it does not fly well for them in the end, to the International Space Station on a witch’s broom. Here it becomes more a matter of principle. Many more people want to choose a president such as Putin and very few want Obama. Barack decided to show that his Kung Fu is better and that his country will be a world leader for at least another hundred years because it possess the strongest army (huge military spending and incredible national debt), the most dynamic economy (i.e. well able to take off and plummet), attracts immigrants from all over the world (ahead of them those who were carried in the holds of slave ships).

And yet another pearl of wisdom from the speech of the American president, “When … masked men occupy the buildings in Ukraine, the world looks to America waiting for her assistance” so said Obama. Just words, of course, they were beautiful. But it is unclear who this descendant of the Kenyan expat has in mind, the Nazis at the Maidan in Kiev or the resistance from Donetsk and Luhansk? They all prefer to go in disguise.

In conclusion, this entire farce of sanctions is more like a commotion in a chicken coop with a whole lot of crowing and cackling than a serious event. Priority Number 1 of those imposing sanctions is in reality not to damage Russia, but to minimize any self-inflicted losses. Japan is not an exception in any case.

Konstantin Penzev is an author and historian, contributing columnist for “The New Eastern Outlook”.

The intrigue behind the visit, that was a major attraction for the public and the media alike, was the chance that Russia and China could sign a gas supply contract. The kind of attention towards this deal was provoked by the latest developments in Ukraine along with the US and EU sanctions against Russia. The audience was really curious in which manner Russian authorities would behave under pressure.

In reality the widely covered crisis in Ukraine and the gas contract between Russia and China have little in common. Ukraine is an independent state, it has been for more than two decades, and with each passing year it has been stumbling with the same old problems, including gas delivery issues. In particular, Ukraine has made a number of attempts to blackmail Russia over the gas transit, additionally it had been stealing the gas that was designated for the EU consumers. Unfortunately, the Ukrainian state failed to mature as a nation and now, in 2014, it’s completely falling apart. Moscow has long been aware of this fact, so it had been looking for a way to bypass Ukraine in the delivery chain to Europe, this was the thinking behind the construction of the South Stream gas pipeline that runs across the Black Sea and Bulgarian soil.

As for Ukraine, it has lately been the focus of the American politico-military game, and now Washington is trying to drag this country into NATO to build its military bases and missile defense systems, it may as well be using the country’s population as cheap cannon fodder afterwards. It is clear that the construction of the South Stream provokes no enthusiasm in the White House, while the EU, on the contrary, believes that it will be playing a major part in securing its energy supplies.

As for the gas contract between Russia and China, it has been in the pipeline for over 10 years, and has never attracted a lot of public and media attention before. Of course, as in any trade, Russia would like to sell more expensive, and China strives to buy cheaper. Since the size of the deal is considerable, both sides were acting very cautiously , afraid to make a mistake, especially when neither of them was in straitened circumstances. Europe, even if it chooses so, can not give up on Russian gas in the short run, as for China ‘s gas needs they have not yet reached a critical level .

According to some Russian analysts, by 2020, China’s yearly demand for gas will reach 300-350 billion cubic meters. China will be able to extract 115 billion cubic meters on its own, another 80 billion cubic meters could be obtained through liquefied natural gas supplies. It’s unlikely that Asia-Pacific countries would be able to provide more than 40 billion cubic meters per year. As for China’s demand in 2030, experts predict that the gas consumption level will exceed the European, which as of now amounts to 600 billion cubic meters. Russia is planning to start with shipping 38 billion cubic meters to China and subsequently raise this level to 60 billion cubic meters along the Eastern and Western supply routes.

Natural gas has a number of alternatives — among them are coal and nuclear power. The latter requires a spare country for any government to fully rely on. Coal is bad in terms of environment, as for nuclear power it can be handy for the industry development, but is not very convenient for the day-to-day use. Japan’s experience has clearly showed that a NPP constructed along a coast line, in seismically active areas, according to some unsuccessful American projects may bring a country in a very difficult situation .

It should be recognized that at the moment, natural gas has little to no real competition among energy sources. Its price will rise, and Russia will not be expandable in any country’s supply plans.

After holding a theatrical pause, Gazprom and CNPC have signed on May 21 a 30-year long contract on the yearly supply of 38 billion cubic meters along the Eastern supply route . Alexey Miller, the head of Gazprom, refuses to reveal the exact price for one thousand cubic meters, though the total contract price is already known – 400 billion dollars.  «Forbs» and other anti-Russian PR on May 21 reported that “China has refused to sign a gas contract with Russia”, but within a few hours the news was to be changed.

It’s clear that Russia does not want to lose the European market and become dependent on China, but at the same time it has little desire to downplay its relationships with China. Kremlin calls for a balance in the relationship with Europe and China, and Washington is moved by a maniacal desire to rule the world. In short, the White House creates problems for everyone, and it seems that it has succeeded in creating some for itself.

What other contracts , except for the above discussed, have been signed in Shanghai?

The Russian company Novatek has signed a contract with China’s CNPC to supply 3 million tons of liquefied natural gas per year. The contract will be implemented in the framework of the project “Yamal SPG” , which involves the development of the South Tambeiskoye gas field and construction of a plant with a capacity of producing 16.5 million tons of liquefied natural gas per year and one million tons of gas condensate per year. The first phase the project will be able to produce 5.5 million tons per year by 2017.

China’s largest car manufacturer Great Wall Motors announced that it will launch a plant in Tula in 2017. Investments in this project will amount to 12 to 18 billion rubles. The plant will be producing 150 thousand cars per year .

Rosneft and CNPC signed a deal to launch an oil refinery in Tianjin at the end of 2019, Rosneft will be the sole supplier for this refinery. The plant’s refining capacity must be around 16 million tons per year. Investments in construction are estimated to amount to 5 billion dollars, the second stage involves the creation of a network of petrol stations in China, which will operate under the brands of Rosneft and CNPC.

Russian Railways and China Railway Corporation have agreed to develop infrastructure and to increase the amount of railway traffic. The companies are planing to develop the rail infrastructure in the areas that are close to the bilateral border and to increase the volume of traffic between the countries along with the transit traffic.

As for aviation, Russia and China are going to create a civil widebody aircraft. The contract on its creation was signed between the “Joint Aircraft Corporation” and the Chinese corporation COMAC. The future plane must occupy a considerable share of the Chinese and Russian markets and become a serious player on other markets. The second project in the field of aviation is the production of a modernized version of Russian transport helicopter Mi- 26 in China.

As for the current political relations between Russia and China, they could be described as friendly. An editorial under the title “The Chinese public opinion should be on the side of Russia and Putin” in a Chinese newspaper “Huanqiu Shibao” states that: “In its foreign policy towards Moscow China has taken a position of “neutrality with a slight twist of sympathy towards Russia”. This statement wont be a major irritation for some countries, but at the same time gives China an opportunity to become a conciliator at the right time that will help parties to find a solution that would satisfy everyone. Thus, China won’t be involved in a confrontation with Western countries and at the same time would be able to help Moscow. But it’s about time for the Chinese public opinion, the paper says, to be as direct and harsh as it takes in order to condemn Western participation in an illegal coup in Ukraine. “It should show the world that Russia is not alone”.

Konstantin Penzev, writer and historian, observer for the online magazine “New Eastern Outlook”.

The staging area for Naval Cooperation changes every year. In 2012, the maneuvers were held from 22 April to 27 April in the Yellow Sea off the coast of Qingdao, in eastern China’s Shangdong province. They involved 25 ships, 13 airplanes, nine helicopters and two detachments of special forces from either side. In 2013, the maneuvers took place from 8 July to 10 July in the Peter the Great Gulf. This year’s exercises will be held from late May to early June in the northern part of the East China Sea, near the disputed Senkaku Islands, known as Diaoyu in China. They will involve about 20 ships, including the missile cruiser Varyag, the submarine chaser Admiral Panteleyev, the large amphibious ship Admiral Nevel and others.

This is how the proverbial “Chinese threat” is going to look.

The South China Morning Post reported that Beijing was unhappy about what U.S. President Barack Obama said during his latest visit to East Asia. “Picking the East China Sea as the location of the exercises is clearly a political gesture to protest U.S. sanctions against Russia and Washington’s interference in the territorial disputes between China and Japan,” expert Li Jie told the newspaper’s editorial board.

Another recent news item read as follows:

Vladimir Putin due to visit China on 20-21 May

“During President Vladimir Putin’s upcoming visit to China in May, the China National Petroleum Corporation and Gazprom may sign a contract to build a gas pipeline from Russia to China and also a contract for Russian gas delivery,” Zhang Di, chief economic adviser of the Chinese ambassador to Russia, said in an interview with the Interfax news service.

USA Today’s David Andelman said the main agenda topic of the visit is a 30-year agreement for the supply of large quantities of gas to China. At least 38 billion cubic meters of gas will start flowing to China annually beginning in 2018. That’s roughly the same amount as the whole European Union (with the exception of Germany) buys from Russia.

As Deputy Prime Minister Arkady Dvorkovich noted in April during a working visit to Beijing, the Russian and Chinese sides had reached a preliminary agreement on a number of contracts (or at least hastened the preparations for some of them) prior to the Russian leader’s visit to China. Dvorkovich said the principal matters to be discussed are gas contracts and gas delivery from Russia to China via the eastern route. The contract for Novatek’s Yamal LNG project is ready. Rosneft has some projects that are of interest as well. There is talk of increasing gas exports from Russia through the sea route by several million tons per year, as well as the joint development of a number of deposits on Sakhalin and in Eastern Siberia.

In addition, preliminary talks addressed cooperation in the realm of coal production. In particular, the parties discussed extraction of coal deposits, construction of power plants near coal mines and the possibility of generating more electricity in China. They agreed to speed up the work on the Tianjin refinery project.

Putin’s visit to China was not prompted by any political happening, for example, threats of sanctions by the U.S. and the EU, problems with Ukraine, and so forth. The Russian president’s visit fits Russia’s overarching policy, which involves deepening economic ties with the Asia-Pacific region. This policy is based on commerce and gain. These days, the Kremlin does not concern itself with pretensions of global hegemony and propaganda about what prevailing system of values is best. Top Russian leaders visit China almost every year, and the range of issues that Moscow and Beijing discuss remains basically unchanged.

A special dynamic is given to Russia-China relations by American policy, which is as aggressive as it is asinine. Michael McFaul, a former American ambassador to Russia, said this spring that “nurturing Chinese distance from a revisionist Russia is especially important.” To further the aim of nurturing distance, Washington works to subvert both Russia and China by playing one off against the other, and that is so obvious. Great strategy there, America, very clever. Be advised that the anti-China propaganda in some Russian media will be ramped up to make the White House happy. Tales will once again be circulated with claims that “there are lots of Chinese, and they really want to settle in Magadan and Yakutia.”

Washington’s behavior is actually nudging Russia and China toward each other, says The National Interest editor Galen Carpenter. According to him, the United States is on the verge of making a huge foreign policy blunder, turning two leading world powers against it at the same time. The strain is evident in bilateral relations between the U.S. and Beijing and Moscow, and right now it is running at very high levels.

In any event, though, the influence the United States exerts on Russian-Chinese relations should not be overstated. Rapprochement between China and Russia is occurring chiefly in response to objective considerations, the most important of which is the economy. Russia possesses a vast store of energy resources, and most global production of high-demand consumer goods has moved from the EU and Japan to China. Chinese businesspeople now own many world-famous consumer brands. So why wouldn’t Russia and China increase trade volume to as much as $200 billion by 2020?

Exchanges might not be paid for in U.S. dollars but in the currencies of the two countries. In Suifenhe, where there is brisk cross-border trade, the ruble enjoys full recognition as a means of payment.

Finally, we must not overlook another crucial factor that helps draw the people of Russia and China closer together: cultural and educational ties. Ilya Ryasnov, a cultural studies scholar from Novosibirsk, notes in his article “Cultural Cooperation Between Russia and China in the 21st Century” that Russian intellectual culture has had a huge impact on the Chinese national culture in literature, theater, ballet, music and other art forms. In the 20^th century, a wave of Russian immigration to China was followed by the socialist phase of cultural interaction. This helped build the ranks of the Chinese intelligentsia and contributed mightily to the modernization of China.

The relationship cannot now be returned to its previous state, but a new model of cultural cooperation between the two countries has become possible. It is all about cooperation and preservation of the uniqueness of each culture. This new phase of interaction will likely play out as a dialogue. China is an exceedingly fascinating and wondrous civilization that cherishes education and has preserved its traditional values.

 Konstantin Penzev, writer and historian, observer for the online magazine “New Eastern Outlook”.

These opportunities should also be taken advantage of because the economic state of the European Union (Russia’s main trading partner today) cannot be called stable. Meanwhile on the political arena, under pressure from Washington, the EU is presently showing pronounced aggression towards Russia. It appears that the European Union is not an independent government institution and it is plainly clear that it is under Washington’s full political and military control. The latter is hardly interested in gains for its junior partner and is ready to sacrifice them for its own profits. American claims to rule through global diktat cannot be called an adequate representation of the country’s actual position, while their behavior has recently become increasingly more opportunistic and irresponsible. In this situation, skewing the Russian energy trade towards Europe seems fairly dangerous. It is necessary to instead deeply diversify this trade and this can be accomplished practically only through China, Japan, Korea and a few other countries in East Asia.

There is a possibility to trade energy resources (gas in particular) with India, but there are a host of problems here, mainly linked with Afghanistan, Pakistan and the U.S. The latter see Afghanistan as a heroin manufacturing plant and any sort of pipelines in Afghanistan are of no use to Washington. Correspondingly, developing economic ties with East Asia is not simply a profitable affair with hefty prospects, but it is practically a vital necessity.

What can Russia offer on the East Asian market? The main goods would be:

• Oil and gas (majority of the goods)

• Nuclear energy

• Weapons

• Space services and GLONASS

• Transit potential

Since 2010 (considering separate countries), China has had the largest amount of trade with Russia and is in fourth place for accumulated investment.

In expanding into the East Asian markets, Russia faces problems caused by the government of Japan, a country that is politically subordinate to the U.S. Japan has known territorial disputes with Russia. Until the Land of the Rising Sun gains real independence from Washington, these territorial issues will not be resolved.

Meanwhile, Japan has accumulated a whole host of very difficult problems as of late, and several of them are related directly to its dependence on the U.S.

According to its finance ministry, Japan’s foreign trade deficit shot up to ¥10.87 trillion ($107 billion). The deficit increased by 19.6% due to the large amount of imports in the previous fiscal period and amounted to ¥80.67 trillion ($791 billion). After operations at all nuclear power plants were halted due to the accident at Fukushima, Japan has been forced to buy additional energy resources to meet its needs. This is why oil import expenses increased by 18.4% and liquefied natural gas imports increased by 18.2% in the last fiscal year. Up until now, Japan has imported most of its LNG from Australia, Qatar and Brunei.

It would appear that in a situation like this, it is necessary to immediately foster good neighborly ties with Russia and to invest in developing oil and gas deposits in Siberia and the Far East. Alas, national interests are not as important to the Japanese government as those of the White House. On Friday, March 29, the U.S. Department of State announced its intentions to begin exporting shale gas to Japan. This begs a fairly logical question. In what way could natural gas from Sakhalin possibly be more expensive than shale gas from the U.S?

Exploiting its vassal states is a very lucrative business for the White House and is a good plan for keeping the American economy afloat. Washington orders its trusted henchmen to refuse Russian gas under the pretext of sanctions and offers them its own shale gas instead, with a hefty markup of course. After all, someone has to fund democracy, isn’t that right?

Head of the State Duma Committee on Energy Ivan Grachev stated last year in Tokyo (RIA Novosti) that Japan needs to realize the following: there will be no utopia, there will be no cheap shale gas and there will be no cheap renewable energy. Gas prices will only continue to rise. One can only see lower prices by participating in projects with high added value and by receiving additional profits. Ivan Grachev stated, “For the Russian Federation, this is the best scenario. The eastern oil and gas-rich provinces have very complex gas: it contains a lot of helium, ethane, propane and butane. Using propane and butane separately increases the added value ten-fold. Thus the opportunities for everyone involved in the project are simply colossal.” Grachev stated that Japan has cutting-edge technology to separate helium. For the Russian Federation, using it “would mean lowering the investment and the technological risks”.

At a session of the Government Commission on the Socio-Economic Development of the Far East which took place on April 25 of this year, Prime Minister Dmitry Medvedev confirmed that the Far East is the absolute strategic priority for Russia, although a very challenging one. According to the prime minister, to develop the region’s economy, it is necessary to first overcome certain inertia, primarily bureaucratic, to stimulate the creation of import-substituting technologies and to move towards exporting finished products and services with a high added value.

The Far East needs to find its own niche both within Russia and in the international division of labor while also integrating into the international chain of industrial cooperation. The first order of business is to raise various parameters to the levels exhibited in the developed economies of the Asia Pacific region, which include taxation and administrative burden.

There is presently a host of promising projects for the Far East, the ambitious Eastern Petrochemical Company project in particular that mainly follows along the Rosneft line, which is currently headed by Igor Sechin.

Rosneft has increased its investments into the Far Eastern Federal District from 19 billion rubles to 37 billion rubles between 2011 and 2013, which is almost double. By 2015, the company plans to once again double this to 79 billion. From 2012 to 2015, the annual growth will be around 25-30% in constant price, which roughly corresponds to the dynamics seen in China.

The volume of investments into current Rosneft projects in the Far East and in East Siberia amounted to 158 billion rubles in 2013. These facilities employ around 20,000 people who contributed around 300 billion rubles into the budget in 2013. This is the present situation.

According to Igor Sechin, Rosneft’s new projects will ensure that the annual volume of investments into the country’s eastern regions reach over 300 billion rubles by 2020. Budget revenue during the life cycle of these projects is estimated to be almost 14 trillion rubles. In this way, Rosneft’s investment activities turn into a key factor influencing the economic development of the Far Eastern Federal District.

Konstantin Penzev, writer and historian, observer for the online magazine “New Eastern Outlook”.