InfoAnda - Russia launches major gas project near Japan

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Yahoo! My Yahoo! Mail Yahoo! Search Search: Sign InNew User? Sign Up News Home - Help Navigation Primary Navigation Home Singapore Asia Pacific World Business Entertainment Sports Technology Top Stories Most Popular Secondary Navigation Singapore Asia Pacific World Search Search: Russia launches major gas project near Japan AFP - Thursday, February 19 KORSAKOV, Russia, Feb 18, 2009 (AFP) - - Japanese Premier Taro Aso and Russian President Dmitry Medvedev on Wednesday inaugurated Russia's first Liquified Natural Gas (LNG) plant that will supply Japan with millions of tonnes of gas annually. ADVERTISEMENT Five percent of the world's total LNG supply is eventually expected to come from the massive complex on the icy shores of Sakhalin Island, located about 150 kilometres (90 miles) from Japan's northern island of Hokkaido. Around 65 percent of the plant's annual production of 9.8 million tonnes of LNG will go to Japan, with the rest roughly split between South Korea and the United States, according to Sakhalin Energy, the consortium behind the project. Aso -- the first Japanese premier to visit Sakhalin since World War II -- hailed Russia as "an important partner in the Asia-Pacific region" and said both leaders pledged to resolve a territorial row over nearby islands. "By making progress in the negotiations over the biggest issue that lies between the two nations -- the final resolution of the territorial issues -- I strongly hope for building of Japan-Russia relations that are befitting ... true partners in this region," Aso said. Medvedev added: "This (the LNG plant) strengthens our position, Russia's position, as an important player on the global energy market and and I will not hide that we are very pleased by this." Aso's visit underlined the importance of the project for Japan, which has been seeking to reduce its dependence on Middle Eastern oil and gas. He said Russian Prime Minister Vladimir Putin would visit Japan in May. It is the first trip to Sakhalin by a Japanese prime minister since the days when Japan held the southern part of the island. Hundreds of thousands of Japanese were evacuated from Sakhalin after World War II. The row over the disputed islands, called the southern Kurils by Russia and the Northern Territories by Japan, has prevented the two countries from signing a peace treaty to formally end World War II, despite extensive trade links. Ironically, the new LNG plant, located outside the port town of Korsakov, stands near the rubble of an old Japanese monument marking the landing of Japanese troops on Sakhalin in 1905. Despite the fanfare of Wednesday's ceremony -- which was also attended by Britain's Prince Andrew -- the first LNG tanker will only leave in March and the plant will only come fully online next year. The ceremony marked the start of the refrigeration process needed to cool the gas down to minus 160 Celsius (minus 260 Fahrenheit) so it turns liquid, said technical experts from Sakhalin Energy. The plant is expected to produce 9.8 million tonnes of LNG per year, the company says. "Next year the plant will reach its projected capacity. After that it will satisfy 5.0 percent of the world's demand for LNG," said Alexander Medvedev, the deputy chairman of Russian state-run energy giant Gazprom. South Korean officials have said Seoul would import 1.5 million tonnes of LNG from Russia every year beginning in April. The plant opening marks the culmination of Sakhalin-2, a 20-billion-dollar oil and gas project that has been led by Gazprom since a controversial change of ownership in 2007. Gazprom acquired 50 percent plus one share in Sakhalin-2 after the project's developer, then led by Shell, encountered major legal difficulties with the Russian government. Shell now owns a 27.5 percent stake in the project, while Japan's Mitsui and Mitsubishi groups own 12.5 percent and 10 percent respectively. "I trust this project will become a very reliable energy source for Japan, and also the Asia Pacific region," said Mitsubishi chief executive Yorihiko Kojima. The plant's opening comes a month after Russia's reputation as a reliable energy supplier was shaken by the Russia-Ukraine gas crisis, in which a payment dispute between Moscow and Kiev seriously disrupted gas supplies to Europe. A similar situation could not happen in Asia because LNG by its nature does not pass through transit countries, Sakhalin Energy chief executive Ian Craig told reporters ahead of the ceremony. "The beauty of LNG is that there are no intermediaries," Craig said. 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