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Thursday, September 13, 2012

Russia And Japan Play Let's Make A Deal For Natural Gas

Here's some good news for all of long-suffering natural gas sufferers.

Russia and Japan are putting energy co-operation ahead of a longstanding territorial dispute as they move ahead with a long-awaited liquefied natural gas project in this far eastern seaport.

Russian president Vladimir Putin and Japanese prime minister Noda Yoshihiko (surname first) oversaw the signing of a memorandum for a $13-billion project with Japan’s Agency for Natural Resources and Energy, on the sidelines of a Pacific Rim summit.

The project “will have a great meaning for developing the eastern part of the Unified Gas Supply System of Russia as well as raising Russian gas supplies to Asia-Pacific markets including Japan,” said chairman Alexei Miller of the Russian oil and gas giant Gazprom.

“I would like to emphasize that the Japanese market has an advantageous size and is considered a top priority in the Far East,” adds Miller.

Japan used 83 million tons of LNG (liquified natural gas) in 2011, accounting for 14 per cent of its total energy use. Almost all the natural gas Japan uses is in the form of LNG.

Gazprom is the world’s largest producer of gas, but its pipeline gas business has been hit by sliding demand for gas while competing liquefied natural gas carried by ship has flooded European markets. Gazprom relies on pipelines and long-term pricing agreements.

Miller says that Gazprom’s exports of natural gas to the Asia-Pacific would soon exceed the volume sold to Europe, and as such Gazprom and its partners have conducted a feasibility study on transmission and marketing of natural gas and chemical products in the Asia-Pacific region.

Japan Far East Gas Co. - a consortium participating in the government-backed project, includes Itochu Corp., Japan Petroleum Exploration Co., Marubeni Corp., Inpex Corp. and Itochu Oil Exploration Co.

As of now, Gazprom plans to extend a natural gas pipeline from Sakhalin to Vladivostok to a seaside terminal where the gas would be processed for shipment to Japan and other markets. The new project, if completed, would have a capacity of 10 million tons annually, doubling Gazprom’s capacity from its only other plant, also on Sakhalin.

The photo above shows a tanker carrying liquified natural gas at a port in Chiba.

Andrew Joseph

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