Sakhalin 2 LNG production to have major impact for Japanese gas consumers

The world's largest oil and gas project Sakhalin-2 has begun to produce Russia's first LNG for the world market. The first deliveries will go to Japan, where Russian LNG will have a major impact.

The huge Prirodnoe plant will pump 5% of the world's LNG to America, Korea and Japan through project partner Mitsui. Shoei Utsuda, President and CEO of Mitsui says the impact will be nearly immediate

“It takes only two and a half days from Sakhalin to the Japanese market, compared with more than one month from the Middle East to Japan, so you will know the difference.”

The technology doesn't require traditional pipelines to transport gas. Natural gas turns to liquid at minus 160 degrees Celsius. That allows it to be shipped by tanker. When it reaches its destination LNG is heated back for use. The LNG liquefying equipment is called a “train”. Sakhalin's two trains will make almost 10 million tons a year. By 2011 they could already start on a third according to Shell CEO, Jeroen Van der Veer

“We kept space for a third train. I think it will happen one day, but you have to get many things right before you can start building that. It is about supplies, finance, customers. And of course we have that dream.”

A tanker will deliver the first LNG to start clients Tokyo Gas and Tokyo Electric Power Company next month.