Medvedev Eyeing Energy, Modernization Deals in Asia Trip

President Dmitry Medvedev will lead a delegation pursuing deals ranging from gas supply agreements to foreign investment when he travels to Japan and South Korea this week for meetings with world leaders as Russia seeks to increase its presence on Asian markets.

OAO Gazprom and Korea Gas Corp. will sign a “road map” to export Russian gas to South Korea, Sergei Prikhodko, Medvedev’s foreign policy aide, told reporters in Moscow ahead of the Group of 20 meeting Nov. 11-12 in Seoul and the Asia-Pacific Economic Cooperation summit Nov. 13-14 in Yokohama, Japan. South Korean steelmaker Posco and OAO Mechel, Russia’s largest producer of coal for steelmakers, will sign a cooperation accord.

“Russia has shifted its investment, trade and energy focus toward Asia over the past year,” said Chris Weafer, chief strategist at Moscow-based UralSib Financial Corp. “It has now established a much better relationship with the EU and is looking to extend that with an improved position in Asia.”

Medvedev traveled to China in September and Vietnam last month as Russia seeks to benefit from faster growth in Asian markets compared with the European Union, which currently accounts for half the country’s foreign trade. Gazprom, Russia’s largest company, is increasingly looking to Asian customers, as it faces competition in Europe.

Gazprom warned the EU last month that its move away from long-term contracts may lead to a drop in supply for European customers and an increase in exports to Asia. Sakhalin Energy, a Gazprom-led venture, began shipping liquefied natural gas to Japan and South Korea last year and aims to sign a contract next year to supply China National Petroleum Corp. with 30 billion cubic meters of gas annually for 30 years.

Japanese Investment

Gazprom Chief Executive Officer Alexei Miller and Mechel owner Igor Zyuzin will accompany Medvedev to South Korea, along with United Co. Rusal CEO Oleg Deripaska and Andrei Kostin, head of VTB Group, Russia’s second-largest bank.

The delegation plans to meet with 10 leading Japanese investment companies to discuss joint projects in areas such as energy efficiency, telecommunications and nuclear energy, key to Medvedev’s plan to modernize the Russian economy, Arkady Dvorkovich, the president’s chief economy aide, said yesterday.

“Each will bring concrete proposals for concrete projects,” he told reporters in Moscow. “These will not be just talks on the need to activate something, expand or deepen.”

A group comprised of Japan’s Mitsubishi Heavy Industries Ltd., China National Chemical Corp. and Russia’s OAO Ammoniy will agree to build $1 billion chemical plant in the Russian republic of Tatartstan, Prikhodko said.

Korean Links

Medvedev plans to meet with South Korean President Lee Myung Bak while he’s in Seoul for the G-20 summit. Topics will include North Korea’s nuclear program and infrastructure links between the three countries, Prikhodko said.

The two presidents will give an “impetus” to long-term proposal to connect South Korea to Europe via the Trans-Siberian railway and plans to build a power grid across North Korea so Russia can supply electricity to the south, Prikhodko said.

At the APEC meeting in Yokohama, Medvedev will push Russia’s integration agenda even further.

“We are interested in expanding our participation in economic, humanitarian and political cooperation in the Asia-Pacific region,” Dvorkovich said. “We hope at the summit we will manage to discuss concrete instruments of that cooperation.”

Kuril Dispute

Medvedev may also meet Japanese Prime Minister Naoto Kan, following a recent spat over Russian president’s visit to the Kuril islands this month, Prikhodko said.

Kan said yesterday that he would assert Japan’s claim to the four islands, called the Southern Kurils in Russia and Northern Territories in Japan, that the Soviet Union occupied at the end of World War II. The dispute over the islands has prevented the two countries from signing a formal peace treaty.

Russia is open to discussing all issues during the meeting, Prikhodko said, without elaborating.

“Even though the dispute has not affected major investment by Japan’s automobile industry or by Japanese companies in Sakhalin, the Kremlin seems very keen to end all legacy disputes in order to improve the country’s investment credentials,” Weafer said.

Medvedev’s visit to the Kurils was “deliberate in order to start the end game with this dispute” and move to a more pragmatic foreign policy Russia unveiled earlier this year with “no friends and enemies, but only interests,” Weafer said.

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