(EnergyAsia, Feb 25) — Russia’s Sakhalin Energy said it recently signed a full sales and purchase agreement to supply Tokyo Gas with 1.1 million tonnes a year of liquefied natural gas (LNG) for a period of 24 years.

Sakhalin Energy said the agreement completes the gas sales deal with Tokyo Gas, which became the first foundation customer to commit to buying LNG on a long-term basis from the Sakhalin II Project.


The agreement follows an earlier Heads of Agreement (HoA) that was signed in May 2003, and completes the full terms and conditions of the LNG sales and purchase agreement.


In a statement, Sakhalin Energy said: “This signing further reinforces Sakhalin Island as a strategic source of natural gas for Japan and confirms the wider Asia Pacific region as a major new market for Russian gas supplies.”


Ian Craig, the company’s CEO, signed the agreement with Tokyo Gas President Norio Ichino at a ceremony in Yuzhno-Sakhalinsk on Sakhalin Island.


“In 2003, Tokyo Gas signed a HoA to become our first long-term customer. Since that time, we have worked closely with them and we are extremely pleased to have signed the final agreement today. We look forward to Sakhalin Island and the Sakhalin II Project delivering the first Russian gas supplies to Japan in November 2007,” said Mr Craig.


Mr Ichino said: “Tokyo Gas regards the Sakhalin II project as a strategically important supply source. Sakhalin LNG will assist us to diversify our LNG supplies and will contribute to the development of stronger relationships between Russia and Japan.”


Yuzhno-Sakhalinsk-based Sakhalin Energy Investment Company Ltd was established in April 1994 for the purpose of implementing and developing the Sakhalin-II integrated oil and gas project. The shareholders in Sakhalin Energy include Shell Sakhalin Holdings BV (55%), Mitsui Sakhalin Holdings BV (25%) and Mitsubishi Corporation’s Diamond Gas Sakhalin BV (20%).


The following sales deals have also been agreed:

  • Tokyo Electric, 1.5 million t/y, starting from project commencement, for a period of 22 years.

  • Kyushu Electric, 0.5 t/y, commencing 2009, for a period of 22 years.

  • Toho Gas, 0.3 t/y starting 2009, for a period of 24 years.

  • Baja Mexico (Shell Eastern Trading), 1.6 t/y for a period of 20 years.

  • KOGAS, 1.5 t/y plus a possible option of a further 0.5 t/y starting 2008 for a period of 20 years.