April 18 (Bloomberg) -- Russia plans to build the world's longest tunnel, a
transport and pipeline link under the Bering Strait to Alaska, as part of a
$65 billion project to supply the U.S. with oil, natural gas and electricity
from Siberia.

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, told reporters in Moscow today.
State organizations and private companies in partnership would build and
control the route, known as TKM-World Link, he said.

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, said at the 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. ``The Chinese are crying
out for our commodities and willing to finance the transport links, and
we're sending oil to Alaska.''

In Alaska, a supporter of the project is former Governor Walter Joseph
Hickel, who plans to co-chair a conference on the subject in Moscow next
week.

``Governor Hickel has long supported this concept, and he talks about it and
writes about it,'' said Malcolm Roberts, a senior fellow at the
Anchorage-based Institute of the North, a research policy group focused on
Arctic issues. Hickel governed Alaska from 1966 to 1969 as a Republican and
then from 1990 to 1994 as a member of the Independence Party.

Alaska's current officials, however, are preoccupied with other issues,
including a plan to develop a pipeline to transport natural gas from the
North Slope to the lower 48 U.S. states, Roberts said.

The U.S. government's Federal Railroad Administration isn't directly
involved in talks about the link, agency spokesman Warren Flatau said today.

Finance Agencies

Tsar Nicholas II, Russia's last emperor, was the first Russian leader to
approve a plan for a tunnel under the Bering Strait, in 1905, 38 years after
his grandfather sold Alaska to America for $7.2 million. World War I ended
the project.

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 OAO
Russian Railways, national utility OAO Unified Energy System and pipeline
operator OAO Transneft, according to a 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 OAO Hydro OGK, Unified Energy's hydropower unit and a potential
investor.

Transport Electricity

``It's cheaper to transport electricity east, and with our unique tidal
resources, the potential is real,'' Zubakin said. Hydro OGK plans by 2020 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.

Cluster Projects

Rail links in Russia and the U.S., where an almost 2,000- kilometer stretch
from Angora to Fort Nelson in Canada would continue the route, would cost up
to $15 billion, Razbegin said. With cargo traffic of as much as 100 million
tons annually expected on the World Link, the investments in the rail
section could be repaid in 20 years, he said.

``The transit link is that string on which all our industrial cluster
projects could hang,'' Zubakin 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.