Regional LNG: Shell eyes more Sakhalin LNG sales to Japan: Report

Tuesday, June 1 2004 - 12:26 PM WIB

Energy major Royal Dutch/Shell is in talks with a string of Japanese utilities to seal another liquefied natural gas (LNG) deal for its massive Sakhalin project in Russia's far east by the end of the year, Reuters reported.

Andrew Faulkner, vice president of Shell Gas & Power North Asia, said the project had already sold 3.4 million tonnes per year of LNG to Japan -- the world's biggest importer -- and hoped to raise the volume to 5-6 million tpy by the end of 2005.

"We are in discussions with both existing customers in terms of additional volumes and exercising of options, and we are in discussions with four or five new customers," Faulkner said in an interview on Tuesday.

"We would be anticipating at least one coming to fruition this year."

Even though the 9.6-million-tpy capacity project has only got Japan on board so far, Faulkner said it was pursuing buyers in South Korea, energy-ravenous China and the U.S. west coast with equal vigour and aimed to sell the rest of the volume by the end of next year.

"Japan is unquestionably a priority market for Sakhalin which is not surprising given its proximity, and it is also not surprising given the shareholding of Sakhalin, but we are not putting all our eggs in one basket."

The southern tip of Sakhalin island lies only 40 kilometres (25 miles) from Japan's northern coast. Shell is a 50 percent stakeholder in the $10 billion project. The balance is equally split between Mitsui & Co and Mitsubishi Corp.

Faulkner said the project, due to deliver first gas in November 2007, was also in talks with two LNG import projects in the United States and hoped to clinch a supply deal to the west coast this year.(*)

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