Regional LNG: Sakhalin Energy signs LNG deal with Hiroshima Gas

Sakhalin Energy, the operator for the massive Sakhalin II project, signed a contract Thursday with Japanese firm Hiroshima Gas to supply 210,000 metric tons of liquefied natural gas annually for the next 20 years, the Russian News Agency RIA Novosti reported.

The deal with Hiroshima Gas, a leading Japanese producer and supplier of natural gas and LNG, says deliveries will be carried out using small vessels with ice-breaking capability to transport about 20,000 cubic meters of LNG each.

Sakhalin Energy, owned by Royal Dutch/Shell (55%), Japan's Mitsui (25%) and Mitsubishi (20%), is developing two vast offshore fields off the island of Sakhalin in Russia's Far East that hold estimated recoverable reserves of 150 million metric tons of oil and 500 billion cubic meters of gas. It is also building Russia's first liquefied gas plant on Sakhalin with a designed capacity of 9.6 million tons a year.

The first LNG supplies under the Sakhalin II project are scheduled to start in summer 2008. (*)