The purpose of this paper is to describe the Russian pipeline policy and the counter-measures conducted by consuming countries, which provides a worthwhile lesson for Japan as a permanent energy importer. The nature of pipelines is to form a “natural monopoly” because of the huge investments required and superiority taking precedence against late comers. Russia, the second largest oil producer in the world, has constructed oil exporting networks to ports on the Baltic Sea and the Black Sea as well as an inland pipeline system to Eastern Europe, named “Druzhba”. The latter system has worked to keep Eastern Europe as an isolated economic realm separated from the western world, because this region can not afford to purchase crude oil from the international market due to a lack of hard currency.<br> Russia also has plans to construct several new pipelines to not only cope with future oil demands but to expand transport capacities and access future oil markets. These new pipelines will make use of Russia's geographical characteristics to face the lucrative market of Europe and also the emerging market of Northeast Asia by expanding pipeline infrastructure. Among Russia's planned new pipelines there is a new oil supply system from East Siberia to the Pacific Ocean (ESPO) planned to access new markets in Northeast Asia. Construction has started from Taishet to Skovorodino, however China has been facing a difficulty to agree with Russia in constructing a cross-border oil pipeline from Skovorodino to Daqing because of a precaution by Russia over a so-called “hold-up problem” (making a pipeline to a single country makes the consuming country stronger aginst the supplying country). It is necessary for Russia to construct a dual supply system, i.e. one for the Pacific Ocean and the other for China (the Daqing Spur). Meanwhile, China finally reached agreement with Russia to construct a cross-border oil pipeline from Skovorodino to Daqing with a contribution of a $25B soft loan to Rosneft and Transneft, an example of the success of a difficult project through financial participation by the consuming country.<br> Any pipeline eventually creates a political effect on production, transit and consuming countries, but pipelines are capital intensive infrastructures for which the decisions are made based on the economics and stabilities of operations, not on political effects. On the other hand, politics or consistent engagement by governments is a unique driving force to establish large scale infrastructures such as cross-border pipelines that will contribute to regional stability and prosperity.<br><br>JFL Classification: N54, N74, N75