Energy

Russia Emerging as Japan Energy Supplier

Saturday, July 10, 2010

Japan-Russia Flags

Tokyo -- The relationship between Tokyo and Moscow may be cool as it relates to the "Northern Territories," but the energy connection is beginning to come into its own.

The Nihon Keizai Shinbun reported today that a basic agreement has been reached between the two governments whereby an LNG plant will be built near Vladivostok, piping supplies from a gas field in Siberia to the Japanese market.

Itochu and Japex will have a role in the construction of the facility.

The article says that this plant is expected to go operational in 2017 and thereafter supply as much as 5 million tons, or about 7.5% of Japan's total LNG needs.

Combined with the existing LNG supplies coming from Russia's Sakhalin Island, this means that Russia may account for about 17% of Japanese needs.

The formal agreement on the Vladivostok plant may be signed on the sidelines of the APEC Forum in Yokohama in November.

Aside from LNG, Japan is also starting to import significant quantities of crude oil from Russia through the East Siberia-Pacific Ocean (ESPO) pipeline.

ESPO has the advantage for East Asian customers of being close at hand and not running through the Persian Gulf and the Straits of Malacca.


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