Regional LNG: Sakhalin Energy wins LNG supply contract from Japan’s Toho Gas

Sakhalin-2 project operator Sakhalin Energy Investment Co. Ltd. signed on Friday a deal to supply Japan's Toho Gas Co. Ltd. with 300,000 metric tons of liquefied natural gas (LNG) a year for about 23 years, Dow Jones reported.

The sales deal with Toho Gas is the fourth successful deal signed with a major utility company in Japan, and brings volumes of natural gas sold from Sakhalin-2 to 3.1 million tons a year for periods in excess of 20 years.

The long-term supply of LNG will begin with first deliveries expected in 2010. The two companies will continue negotiations to enable a full sale and purchase agreement to be completed.

LNG will be supplied from Sakhalin Energy's LNG plant, which will be constructed at Prigorodnoye on the southern tip of Sakhalin. Initial construction activities on the plant have already begun. It is the first LNG plant to be built in Russia and will have a total capacity of 9.6 million tons a year. The plant will have two gas liquefaction process trains, each with a capacity of 4.8 million tons a year currently the largest LNG trains under construction in the world.

The Sakhalin Energy consortium comprises the Royal/Dutch Shell Group, Mitsui & Co. and Mitsubishi Corp. (*)