The project, which Russia is coordinating with the U.S. and Canada, would take 10 to 15 years to complete, Viktor Razbegin, deputy head of industrial research at the Russian Economy Ministry, said. State organizations and private companies in partnership would build and control the route, known as TKM-World Link, he added.

A 6,000-kilometer (3,700-mile) transport corridor from Siberia into the U.S. will feed into the tunnel, which at 64 miles will be more than twice as long as the underwater section of the Channel Tunnel between the U.K. and France, according to the plan. The tunnel would run in three sections to link the two islands in the Bering Strait between Russia and the U.S.

“This will be a business project, not a political one,” Maxim Bystrov, deputy head of Russia’s agency for special economic zones, was quoted by Bloomberg as telling a media briefing. Russian officials will formally present the plan to the U.S. and Canadian governments next week, Razbegin said.

The Bering Strait tunnel will cost $10 billion to $12 billion, and the rest of the investment will be spent on the entire transport corridor, the plan estimates.

“The project is a monster,” Yevgeny Nadorshin, chief economist with Trust Investment Bank in Moscow, said in an interview with Bloomberg. “The Chinese are crying out for our commodities and willing to finance the transport links, and we’re sending oil to Alaska.”

The planned undersea tunnel would contain a high-speed railway, highway and pipelines, as well as power and fiber-optic cables, according to TKM-World Link. Investors in the so-called public-private partnership include Russian Railways, national power utility Unified Energy System and state-controlled pipeline operator Transneft. This information was contained in the press release which was handed out at the media briefing and bore the companies’ logos.

Russia and the U.S. may each eventually take 25 percent stakes, with private investors and international finance agencies as other shareholders, Razbegin said. “The governments will act as guarantors for private money,” he said.

The World Link will save North America and Far East Russia $20 billion a year on electricity costs, said Vasily Zubakin, deputy chief executive officer of HydroOGK, Unified Energy’s hydropower unit and a potential investor.

“It’s cheaper to transport electricity east, and with our unique tidal resources, the potential is real,” Zubakin said. By 2020 HydroOGK plans to build the Tugurskaya and Pendzhinskaya tidal plants, each with capacity of as much as 10 gigawatts, in the Okhotsk Sea, close to Sakhalin Island.

The project envisions building high-voltage power lines with a capacity of up to 15 gigawatts to supply the new rail links and also export to North America.

Russian Railways is working on the rail route from Pravaya Lena, south of Yakutsk in the Sakha republic, to Uelen on the Bering Strait, a 3,500 kilometer stretch.

The link could carry commodities from Eastern Siberia and Sakha to North American export markets, said Artur Alexeyev, Sakha’s vice president.

The two regions hold most of Russia’s metal and mineral reserves “and yet only 1.5 percent of it is developed due to lack of infrastructure and tough conditions”, Alexeyev said.

Japan, China and Korea have expressed interest in the project, with Japanese companies offering to burrow the tunnel under the Bering Strait for $60 million a kilometer, half the price set down in the project, Razbegin said.

“This will certainly help to develop Siberia and the Far East, but better port infrastructure would do that too and not cost $65 billion,” Trust’s Nadorshin said. “For all we know, the U.S. doesn’t want to make Alaska a transport hub.”

The figures for the project come from a preliminary feasibility study. A full study could be funded from Russia’s investment fund, set aside for large infrastructure projects, Bystrov said.

See also:

Russia-Alaska tunnel is far off, if not a pipe dream

Reuters: Apr 18, 2007
By Dmitry Zhdannikov

MOSCOW - The world's longest tunnel between Russia and Alaska is a very distant project if not a dream, Russian officials and firms said on Wednesday after supporters said the $65 billion plan was gathering speed.

The idea to build a tunnel or a bridge across the Bering Straits emerged more than 100 years ago under the last Russian tsar, Nicholas II, but vanished into oblivion during Soviet times amid confrontation with the United States.

It was revived after the collapse of the Soviet Union only to be forgotten again after Russia's 1998 financial crisis.

A decade later, the project's enthusiasts and coordinators say Russia's economic upturn make it possible to build the tunnel in 12 years to directly connect the two former arch-rivals.

The project also involves building 6,000 km (3,700 miles) of transport links, including roads, power lines and oil pipelines to deliver resources from Siberia to new markets.

"It is planned to call on the governments of Russia, the United States and Canada to sign an inter-governmental agreement to study and implement the project," the coordination group said in a statement ahead of a planned conference on April 24.

The project is being coordinated by Interhemispheric Bering Strait Tunnel and Railroad Group, co-chaired by Russian academic Viktor Razbegin.

The project coordinators name Russia's economy and transport ministries as well as Russian power, railway and oil pipeline monopolies as among the conference organizers .

But those named played down the idea, with some potential participants saying they were not enthusiastic and others denying they were involved.

"I've never heard of this plan," said Sergei Grigoryev, vice-president of oil pipeline monopoly Transneft.

"We need to first develop fields in East Siberia and this is the very distant future. It will take at least 30 years. And today we are busy doing other things anyway -- we are building a pipeline to China and the Pacific coast," he added.

"We will probably take part in the project, but more discussions are needed," said a spokeswoman for the Russian railway monopoly.

The idea of connecting the United States and Russia may look attractive on a map and ring with political symbolism, but the vast distances to the closest population centers on both sides of the straits may make the proposal economically unviable.

A Russian government source said he doubted the project would get full support at an intergovernmental level.

"I remember there was a plan to change the flow of rivers in Soviet times. It was never implemented though. To be honest, anyone who look at the map will realize that the project is too hard to implement," he said.

Both Russia and the United States would need to build thousands of km of roads and rail-links only to connect their existing infrastructure to the tunnel -- which itself will be more than twice as long as the English Channel tunnel.

On the Russian territory the tunnel would start in the region of Chukotka, whose governor is Roman Abramovich, Russia's richest man and the owner of English soccer club Chelsea.

The billionaire has spent millions of dollars on reviving the economy of the region, peopled with only 50,000, but may balk at spending a big chunk of his fortune on a project which is unlikely to become profitable in the near future.

"It is a matter for federal authorities," said an official close to Abramovich.

See also:

Russia Wants a Rail Link to North America

Der Spiegel: April 20, 2007

TUNNELING UNDER THE BERING STRAIT

Moscow is promoting a new "megaproject" to link Asia with North America by train, pipeline, and fiber-optic cable across the Bering Strait. But skeptics suspect it may be just a bluff to scare Europe about the future of Russian oil and gas supplies.

Russia says it is planning a tunnel to connect Siberia to Alaska across the Bering Strait.

Russian ministers have unveiled a grandiose plan to dig a tunnel under the Bering Strait from Siberia to Alaska in a bid to improve oil and gas transport between Russia and the United States. The ambitious project would also open up the intriguing possibility of a rail connection from New York to Europe over Asia.

The Russian government told reporters in Moscow this week that it will back a $65 billion scheme by a consortium of Russian companies to build the longest tunnel in the world -- which will be an estimated 102 kilometers (63 miles) in length -- to link Russia's vast energy resources to markets in North America. The plan includes a high-speed train line, oil and gas pipelines, and a fiber-optic cable network.

A new rail corridor through British Columbia would connect the tunnel to America's main rail network, while a corridor through Siberia would connect it to Russia's. The tunnel would raise the prospect of a continuous train ride spanning three-quarters of the world -- from New York to London over Canada and Russia.

The plan will be presented to US and Canadian officials next Tuesday, at a Moscow conference called "Megaprojects of Russia's East."

"The project would give Russia's east the chance to become a leading industrial region of the country and one of the most important transit hubs of the world economy," said a statement bearing the logos of Russia's pipeline monopoly Transneft, electricity utility RAO United Energy Systems and the Russian Trade Ministry, among others.

There's just one hitch: A number of powerful people appear to have been left totally out of the loop. "I've never heard of this plan," said Sergei Grigoryev, vice-president of Transneft, according to the London Times. "We need to first develop fields in East Siberia."

Energy poker with Europe?

Some experts called the idea a bluff to scare European countries into signing long-term contracts with Russia for oil and natural gas.

"Russia has been saying to Europe, 'Listen, if you don't like us, we've always got China to sell our gas to,'" said Derek Brower, who covers the energy industry for the London magazine Petroleum Economist. "(But) it's even difficult for Russia to supply China, the fastest-growing energy market in the world, let alone to talk about what sounds like the most absurdly expensive and technologically difficult project to deliver. It just sounds completely outrageous to me."

One US supporter of the project is Alaska's former Governor Walter Joseph Hickel, who will co-chair the conference in Moscow. But the Washington's Federal Railroad Administration isn't directly involved in talks, agency spokesman Warren Flatau told Bloomberg.

High-level Canadian officials were also in the dark. "We are not aware of any Canadian government representatives that have been contacted with respect to this proposal," said Brooke Grantham, a spokesperson for Canada's office of Foreign Affairs and International Trade, according to the Vancouver Sun.

The proposed tunnel would be twice as long as the Channel Tunnel between the United Kingdom and France. But it's not a new idea: Czar Nicholas II first raised the prospect of a Bering Strait rail link in 1905, 38 years after his grandfather sold Alaska to America for $7.2 million. World War I -- and the Russian Revolution -- put the project on ice, however.

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RUSSIA'S AMBITIOUS RAILWAY VISION FOR EASTERN SIBERIA FACES REALITY CHECK

Eurasia Daily Monitor: April 25, 2007
By Sergei Blagov

Russia has announced an extraordinary project to build a transcontinental Yakutsk-Magadan-Anadyr-Alaska rail link, which would include the world's longest subsea tunnel under the Bering Strait. However, the news comes as a reminder that Russia's major railway projects in the East tend to be loss-making and take decades, if not centuries, to materialize.

The plan was revealed in Moscow on April 18 by Viktor Razbegin, deputy head of industrial research at Russia's Economic Development and Trade Ministry and an expert at Russia's Academy of Sciences. He insisted that the project could prove economically viable, despite its huge costs, estimated at $55-67 billion. Razbegin argued the railway would repay construction costs in 13-15 years by attracting and generating up to 70-100 million tons of freight annually.

The 4,000-kilometer Yakutsk-Magadan-Anadyr section of the rail link in Russia would cost $12-15 billion, the tunnel would take another $10-12 billion, while the remaining amount would be invested in infrastructure development, Razbegin said. The 102-kilometer tunnel would be built in three sections through two islands, while the project would also include oil and gas pipelines across the Bering Strait and a fiber optic cable network, he said (Interfax, RIA-Novosti, April 18).

Plans for a tunnel under the Bering Strait, the Yakutiya railway, and the Baikal-Amur Railway line (BAM) were first considered in the 19th century. Stalin revived the BAM idea, and half a million Gulag prisoners built its Eastern section during the 1930s and 1940s.

Following Stalin's death in 1953, BAM construction was abandoned, only to be revived again in the early 1970s by Soviet leader Leonid Brezhnev. The 4,000-kilometer rail system, which traverses Eastern Siberia and the Russian Far East some 400-500 kilometers north of and parallel with the Trans-Siberian railway, was finally declared complete in 1991 at an estimated cost of $10 billion. However, technically the BAM was not completed until December 2003, when the Severomuisk tunnel -- running nearly one mile below ground -- was completed.

Another part of East Siberia's railway system, Yakutiya Railway, has also been subject to delays. Russia has been building this 820-kilometer-long railway between Yakutsk and the BAM since the early 1990s. Although it was originally expected to be completed by 1998, now its completion is tentatively slated for 2008.

Yakutiya Railway was launched in 1995 to operate the Yakutsk-Tommot-Berkakit line. In 2006, it reported net losses of 2 million rubles due to dropping usage. Last year the company funneled 1.7 million tons of freight or about 5% less than in 2005. According to Yakutiya Railway CEO Vasily Shimokhin, the decline is the result of Yakutiya coal companies cutting their shipments. The company currently operates the Tommot-Berkakit line, which funnels some 2 million tons of freight a year.

However, the company aims at raising its turnover, as the Yakutsk-Tommot line is due to be finalized in 2008. This year Yakutiya Railway plans to handle some 2.2 million tons of cargo. Its annual freight is expected to reach 40 million tons and earnings to go up to $800 million by 2012 due to development of coal and iron ore deposits (RBK daily, April 6).

As with BAM, Yakutiya Railway appears to continue struggling to make the ends meet as commercial enterprises due to the high costs. Both lines are located in permafrost areas and run through swamps, taiga, mountain ranges, and over hundreds of rivers, making maintenance expensive. The cost of freight carried by Yakutiya Railway or BAM is roughly twice that of the Trans-Siberian Railway.

Both Yakutiya Railway and the BAM were originally conceived to give the development of Eastern Siberia a much needed boost. Railway designers planned new mining and industrial centers along these routes to mine and process its timber, coal, gold, iron and other resources, but private investors in these projects are yet to show up, while the government is yet to provide funding to build them. Therefore, instead of stimulating new industries in the region, these rail links appear to remain liabilities rather than assets, at least for now.

In terms of its scale and engineering challenges, the proposed Yakutsk-Magadan-Anadyr rail line could equal or exceed the BAM. The Yakutsk-Anadyr link would run through inhospitable permafrost areas with the world's harshest winter weather conditions, and its construction and maintenance costs would be not only exorbitant, but also difficult to estimate in advance.

Therefore, the Yakutsk-Alaska rail link seems destined to hemorrhage red ink, like the BAM and Yakutiya lines, which remain largely priced out of the cargo market because their revenues still cover roughly half of the maintenance costs. As the economic viability of the proposed Yakutsk-Alaska rail link appears an unlikely goal to achieve, this extraordinary project would need equally extraordinary circumstances to materialize.