Gasprom, Japanese Companies to Build LNG Plant near Vladivostok

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Apr. 28 – State-run gas Gazprom and a consortium of Japanese companies led by Itochu Corp. have agreed to study building a liquefied natural gas (LNG) plant and a gas chemical complex in Russia’s Far East city of Vladivostok, as Japan seeks to boost fuel supplies after its worst nuclear accident.

The companies will carry out a feasibility study for a plant with the capacity to produce 10 million tons a year of liquefied natural gas.

That would more than double Russia’s capacity to produce LNG, which is gas cooled to a liquid for transportation by tanker, rivaling the Gazprom-led Sakhalin-2 project, north of Japan.

An agreement on the project was signed in Moscow on Tuesday by Gazprom Deputy Board Chairman Alexander Ananenkov and Japan Far East Gas Co., Ltd Chief Executive Officer Yoshio Matsukawa.

“The parties plan to consider launching a pilot natural gas compression project near Vladivostok for further transportation by sea,” Gazprom said.

The Itochu-led group plans to develop the Vladivostok project via the Japan Far East Gas Company. Itochu and a unit will own 37.5 percent of that company. Japan Petroleum Exploration Company will take 32.5 percent, commodity trader Marubeni will have 20 percent, and energy producer Inpex will have the remaining 10 percent, Osaka-based Itochu Corp. said in a separate statement.

The study could have a bearing on possible increases in Gazprom’s natural gas supplies from Russia to the Pacific Rim states and for making energy supplies to Japan more reliable and secure, Ananenkov said.

Construction of the plant was dependent on the launch of gas supplies from the Republic of Sakha Yakutia in northeast Siberia.

Gazprom plans to start the construction of the Yakutia-Khabarovsk-Vladivostok pipeline in 2012. The company is currently preparing a feasibility study for that project. The 4,500 kilometer pipeline’s annual capacity could reach 32-35 billion cubic meters of gas.

The project, which Gazprom and Itochu initially discussed in 2009, would be the second Russian LNG plant to focus on the Japanese market. Mitsubishi and Mitsui, which already partner with Gazprom on Russia’s only LNG plant at the Sakhalin-2 on Sakhalin Island, have also expressed interest in developing LNG on the Yamal Peninsula, beyond the Arctic Circle.

“Mitsui is considering this project, and we are interested in participating in it,” Mitsui spokesman Kazuhisa Kawamura said Tuesday in Tokyo.

Mitsubishi is also “interested in” the Yamal project among other energy projects, “but there is nothing we are planning to announce about it at this moment,” spokesman Shunsuke Nanami said on Tuesday.

Yamal LNG may start production in 2016 and reach capacity of as much as 15 million tons of the fuel a year in 2018.

Japan is the world’s fourth largest energy consumer, which importing 100 percent of its liquefied natural gas, topping the world’s list of LNG importers.

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