YUZHNO-SAKHALINSK, May 30 (RIA Novosti) - Sakhalin Energy and Japanese company Hiroshima Gas have signed a 20-year contract on the supply of liquefied natural gas (LNG) to Japan, a Sakhalin Energy spokesman said Monday. "The purchase and sale transaction with Hiroshima Gas is already the fifth agreement with Japanese energy companies. LNG supplies are expected to start in 2008," the spokesman said.
Sakhalin Energy CEO Ian Craig said that the agreement reaffirms Russia's capability, and that of Sakhalin in particular, to become an important long-term energy supplier to Japan.
This is also the first agreement envisaging the use of small craft for transporting LNG. Hiroshima Gas plans to use its own ice-class craft with a capacity of 20,000 cu m to carry LNG to its own terminal in the south of Honshu island. Usually 125,000 cubic-meter capacity tankers are used for transporting LNG.
The gas will be transported from a new plant under construction with a capacity of 9.6 million tons a year near the Prigorodnoye settlement on the Aniva Bay coast in Sakhalin's south.
The plant will become Russia's first natural gas liquefying enterprise. The plant is more than 65% complete.
Hiroshima Gas is not the first Japanese company Sakhalin Energy has dealt with. The company has concluded transactions with Tokyo Gas for annually providing 1.1 million tons during 24 years, with Tokyo Electric to annually supply 1.5 million tons for 22 years, with Kyushu Electric for providing 500,000 tons a year for 22 years and with Toho Gas to annually supply 300,000 tons during 24 years.
Similar agreements were made with the Baja Mexico company to annually supply 1.6 million tons during 20 years, and with the Korean gas corporation Kogas for providing 1.5 million tons a year for 20 years, beginning in 2008.
The Sakhalin-II project outlines the development of two deposits, Piltun-Astokhskoye (a mainly oil deposit with associated gas) and Lunskoye (a mainly gas deposit with associated gas condensate and an oil fringe) on the northeastern shelf of the island. Both deposits were discovered in the 1980s.
The aggregate commercial hydrocarbons reserves of both deposits are in excess of one billion barrels (150 million tons) of oil and more than 500 billion cu m (18,000 trillion cubic feet) of natural gas, which is approximately equal to five-year export term of Russian gas to Europe.