The Yomiuri Shimbun, The Asia News Network, Tokyo, Japan | Sat, 01/07/2012 6:38 PM
Japan and Russia likely will reach a broad agreement as early as this month on business plans for a liquefied natural gas plant project in Vladivostok, sources have said.
Both sides reached a basic agreement in 2011 on the joint construction of the LNG plant in the Russian Far East. The plant is expected to produce 10 million tons of LNG a year, the equivalent of about 14 percent of Japan's annual total LNG imports.
About 1 trillion yen is expected to be invested in the project, and the plant is likely to start operations around 2020. The Japanese side expects the plant to contribute to a stable energy supply in the country, the sources said Thursday.
Major Japanese energy-related companies, including Itochu Corp. and Japan Petroleum Exploration Co. (JAPEX), as well as Russian national gas company Gazprom have been conducting research toward business plans.
As a rough framework for the project, including such issues as its profitability, has been consolidated, the Japanese side will present a final research report on the project to the Russian side when senior officials of Gazprom visit Japan from Jan. 20, the sources said.
The project will be profitable if it liquefies for export natural gas produced in eastern Russia, according to the sources.
Starting in February, both sides will decide on such details as LNG prices, the plant's construction costs and overall project costs.
Among possible candidates for the natural gas to be liquefied at the plant in Vladivostok is gas from the Sakhalin-1 project off Sakhalin Island, in which Itochu and others have invested. Another possibility is the Sakhalin-3 project, in which Mitsui & Co. and Mitsubishi Corp. are discussing participation.
There also is a plan to construct a pipeline roughly 2,800 kilometers long to transport natural gas from reserves north of Lake Baikal in eastern Siberia to Vladivostok.
Demand for thermal power generation has been increasing in Japan due to power shortages caused by the crisis at the Fukushima No. 1 nuclear power plant.
Natural gas emits less carbon dioxide than petroleum and other energy resources.
Currently, Japan imports natural gas mainly from Middle Eastern countries. Imports from Vladivostok would be more time-efficient since its natural gas would reach Japan in only two to three days.
Russia has an increased sense of crisis as European nations – Russia's main clients for natural gas – have been diversifying their natural gas suppliers. Therefore, Russia now attaches importance to supplying LNG to Asian nations. (mtq)
