Regional LNG: Shell Sakhalin group signs LNG deal with Kyushu

A Royal Dutch/Shell-led group developing fields on Russia's remote eastern island of Sakhalin said on Thursday it had signed a new liquefied natural gas (LNG) supply deal with Japan's Kyushu Electric, Reuters reported.

The group said in a statement the new deal was a major breakthrough as Kyushu became the third large importer of LNG, giving the group more comfort in its $10-billion project to build the world's biggest LNG plant on Sakhalin by 2006.

Kyushu Electric, one of Japan's 10 leading electric power firms, will join Tokyo Gas and Tokyo Electric Power Co (TEPCO), which had previously agreed to buy LNG from the plant from 2007.

The statement said the group would supply Kyushu with up to 0.5 million tonnes of LNG per year over the next 21 years.

The three existing deals will guarantee the group annual sales of up to 2.8 million tonnes of LNG over the period of 20 years.

The Shell-led group, which also includes Japanese trading house Mitsui & Co Ltd. and Mitsubishi Corp, has been producing oil on Sakhalin since 1999 and hopes to produce 9.6 million tonnes of LNG annually and to capture a quarter of the east Asian market by 2010.(*)