Russia's Gazprom examines LNG options in Japan

Japan has few domestic resources of its own, but a weakened economy means low demand for energy.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Sept. 7, 2017 at 8:47 AM
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Sept. 7 (UPI) -- Russian energy company Gazprom said it signed preliminary agreements for small- and mid-sized liquefied natural gas projects in the Japanese market.

Economies in the Asia-Pacific region are expanding faster than developed nations and taking on more oil and gas resources as a consequence. Island nations like Japan, meanwhile, have few resources of their own and rely on imports from major producers like Russia.

Gazprom Chairman Alexei Miller met on the sidelines of a regional economic forum with Masami Iijima, the chairman of general trading group Mitsui & Co. to sign a framework agreement on liquefied natural gas.

"The document reflects the commitment of the parties to collaborate in producing, transporting and marketing small- and mid-scale LNG in Japan, as well as in LNG bunkering in the Sea of Japan," Gazprom said in a statement.

Bunkering is the ship-to-ship transfer of fuel. With international regulations calling for fewer emissions in the transportation sector, LNG serves a unique niche. Liquefied natural gas also offers more flexibility in terms of deliverability when compared with conventional natural gas, which is bound to transnational pipelines.

Gazprom and Mitsui are partners at the Sakhalin LNG project, Russia's only active LNG facility. Gazprom leads the operating joint venture. Last week, Gazprom's chairman said the "cornerstone" of its strategy was efforts in Eastern markets, but it was building a "formidable" position in the Asian market.

French energy company ENGIE moved early on the evolution in the LNG market by signing an agreement in 2015 with the Japanese shipping company NYK to build vessels powered by the super-cooled form of natural gas.

Demand for LNG in the Japanese market may be limited. With its weak economy, Japan's consumption of electricity has declined for five straight years.

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