Regional LNG: Sakhalin eyes more Japan LNG deal

Russia's Sakhalin Energy Investment Co. said late Thursday it is expecting to sign "several" more long-term liquefied natural gas contracts with Japanese power and gas utilities in 2004, Dow Jones reported.

"We can announce, say, in the first half of 2004, on new LNG contracts with Japanese companies," Andy Calitz, Commercial Director of Sakhalin Energy was quoted as saying.

Calitz reiterated Japan's close proximity to the Sakhalin island is a strong advantage for Japanese power and gas utilities, as shipping LNG from Sakhalin is more economical than shipping LNG from Southeast Asia and Middle East to Japan.

In May, Tokyo Gas Co. , Japan's largest gas utility, signed a 24-year supply contract with Sakhalin Energy, the first Russian LNG import by a Japanese firm.

Later, two other Japanese utilities, Tokyo Electric Power Co. and Kyushu Electric Power Co. , decided to purchase LNG from Sakhalin Energy on a long-term basis.

Starting April 2007, Sakhalin Energy will supply a maximum of 1.1 million metric tons of LNG a year to Tokyo Gas, and 1.2 million tons a year to Tokyo Electric.

Kyushu Electric is expected to receive a maximum of 500,000 tons of LNG a year between 2010 and 2030 on an ex-ship basis.

Sakhalin Energy has begun construction of two LNG plants at the port of Prigorodnoye in southern Sakhalin. The company is a joint venture between Royal Dutch/Shell Group , Mitsui & Co. and Mitsubishi Corp. .

The joint venture also aims to build a 600-kilometer pipeline to transport crude oil and gas to the port from the Piltun-Astokhskoye offshore fields, known as the Sakhalin-2 oil and gas field.(*)