Regional LNG: TEPCO in talks to buy LNG from Sakhalin project

Tokyo Electric Power Co. (TEPCO), the world's second-biggest liquefied natural gas buyer, said it's in talks to purchase the fuel from Royal Dutch/Shell Group's Sakhalin II project in Far East Russia because it's closer than rival suppliers in the Middle East and Southeast Asia, Bloomberg reported Friday.

Spokesman Takashi Nakayama denied a report in Asahi newspaper that TEPCO won't renew a contract to buy 918,000 metric tons a year of LNG from Alaska since November 1969 that expires in March next year. Asahi said TEPCO would buy 1 million tons a year of LNG from Sakhalin II instead, starting in April 2007.

?We are going to extend the Alaska contract possibly for another five years after its expiration,? Nakayama said. ?But Alaska's production is declining, and Sakhalin is geographically closer than Alaska and other places, possibly cutting our fuel costs.?

He wouldn't say how much LNG TEPCO would buy from Alaska after extending that contract, or how much would be bought from Sakhalin. The 918,000 tons a year of LNG that TEPCO gets each year from Alaska makes up about 5.6 percent of its total supply, Nakayama said.

The shareholders of Sakhalin Energy Investment Co., the operator of the project, are Shell with 55 percent, Mitsui & Co. with 25 percent and Mitsubishi Corp. with 20 percent. (*)