Japan to buy Russian gas

Japan will import Russian natural gas - something it has never done before. Tokyo Gas, Japan's leading gas corporation, intends next year to sign a final contract with Sakhalin Energy, a joint venture on which the Dutch-based Shell is prominent. The arrangement envisages Russian gas exports to Japan on project Sakhalin 2, a Tokyo Gas employee said to Novosti.

The final contract is expected to stipulate purchase prices.

A framework contract between Tokyo Gas and Sakhalin Energy was signed in Yuzhno-Sakhalinsk, May 12, for an annual 1.1 million tonnes within 24 years, starting 2007, with maritime shipments by special-purpose vessels. The gas will be pumped into pipelines in the Tokyo port.

Economic experts in Tokyo expect Russia to develop into Asia's biggest gas supplier. The forthcoming transaction will revive an investment project involving investments of a rough total US$10 billion to develop Sakhalin island shelf oil- and gasfields.

Shell will invest 55% of the total, and Japan's Mitsui and Mitsubishi a respective 25% and 20%, says the Japanese press.

Tokyo Electric Power and another three Japanese-based companies also intend to purchase Russian gas. Sakhalin Energy may resell the gas to South Korea and Taiwan.

Project Sakhalin 2 is expected to meet 10% of Asian gas demands or more as the deposits it involves are estimated at 1.1 billion barrels of petroleum and 360 million tonnes of gas in the liquid equivalent.

Japan hopes the endeavour will ease off its power industrial dependence on the Middle East.

Japan is the world's largest liquefied natural gas importer. It purchased an approximate 55 million tonnes for $12.5 billion last year, say economic statistics.

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