Royal Dutch Shell Group .com Rotating Header Image

Russia ships first Sakhalin LNG to Japan

Reuters UK

Sun Mar 29, 2009 8:55am BST

* First LNG shipment loaded at port on Sakhalin

* Cargo of 145,000 cubic metres en route to Tokyo Bay

* LNG for supply to Tokyo Gas and Tokyo Electric Power Co

* Plant to meet 5 pct of world LNG demand when at full cap

(Adds details, background)

By Robin Paxton

MOSCOW, March 29 (Reuters) – Russia sent its first cargo of liquefied natural gas (LNG) to Japan on Sunday from a Pacific island project that will allow the Kremlin to extend its reach in world energy markets from Europe into Asia and North America.

Sakhalin Energy, controlled by gas export monopoly Gazprom (GAZP.MM), loaded the 145,000-cubic-metre cargo for the two-day voyage to Tokyo Bay and the first Japanese buyers of Russian gas: Tokyo Gas Co (9531.T) and Tokyo Electric Power Co (9501.T).

“Russia has marked its entry into the Asia Pacific LNG market and Japan and Korea have a new long-term energy partner,” Sakhalin Energy Chief Executive Ian Craig said in a statement.

The Sakhalin-2 project aims to supply 5 percent of world demand for LNG when it reaches full capacity next year, Russian President Dmitry Medvedev said when he launched the plant on the southern tip of Sakhalin island last month.

The project, in which Royal Dutch Shell (RDSa.L) owns a minority stake after ceding control to Gazprom, is the first LNG plant in Russia, the world’s largest gas producer. Japan’s Mitsubishi Corp (8058.T) and Mitsui (8031.T) also own stakes.

The project became symbolic of resource nationalism in Russia and the state’s ability to overturn previous deals. State-controlled Gazprom officially took control of the venture in 2007 after a prolonged crisis that forced Shell, the project’s former leader, and partners to reduce their holdings.

Sakhalin Energy said on Sunday “practically all” of the 9.6 million tonnes of annual production capacity had already been committed in long-term sales contracts to buyers in Japan, South Korea and other markets.

About 65 percent of the plant’s output will be shipped to eight companies in Japan, the world’s top consumer of LNG, with the rest sold to South Korea and the LNG-hungry North American market via a Mexican terminal, then on to the U.S. West Coast.

The first cargo left the port of Prigorodnoye, where the LNG plant is located, aboard the tanker Energy Frontier. It is scheduled to dock at the Sodegaura terminal in Tokyo Bay. To produce LNG, natural gas from offshore deposits is chilled into liquid at minus 160 degrees Celsius for shipment by tanker. LNG is currently being produced on one of two lines, the second of which will come on stream in mid-2009.

The project will ramp up to full capacity this year and in early 2010, Sakhalin Energy said in the statement.

The project infrastructure includes three offshore platforms, an onshore processing facility, 300 km (190 miles) of offshore pipelines and 1,600 km (1,000 miles) of onshore pipelines.

 

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Comments are closed.

%d bloggers like this: