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Gazprom eyes Japan utilities to expand

OAO Gazprom, Russia's largest gas company, is considering investing in Japanese power utilities in a bid to expand fuel sales to the world's second-largest economy, its chief financial officer said.

"The commissioning of Russia's first liquefied natural gas plant on Sakhalin Island and sales of the fuel to Japan gives us an opportunity for such investment in utilities, although we have no specific plans yet," Andrei Kruglov said in an interview with Bloomberg News in Tokyo yesterday.

Russia, holder of the world's largest natural gas reserves, last month opened its first LNG plant on Sakhalin Island, allowing the gas export monopoly access to markets in Japan, South Korea and the United States. The new LNG plant, part of the Sakhalin-2 project in the nation's far east, is just 160 kilometers from the northern tip of Japan's Hokkaido island.

While Kruglov didn't identify utilities for potential investment, he said that companies with the closest access to gas end-users were attractive to Gazprom. The Sakhalin-2 project has contracts to deliver LNG to nine Japanese power and gas utilities including Tokyo Electric Power Co and Tokyo Gas Co, as well as a client in South Korea and one in North America.

To diversify its customers away from traditional European buyers into Asia, Gazprom is moving ahead with plans to develop 68 trillion cubic meters of potential reserves in East Siberia and on Sakhalin island, according to a company document distributed at a Tokyo press conference earlier.

In 2006, Gazprom took control of the Sakhalin-2 development from Royal Dutch Shell Plc after regulators threatened to close the US$22 billion project on environmental grounds.


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