ST. PETERSBURG--Japan has effectively reached agreement with Russia on the supply of liquefied natural gas from the Russian Far East.
The two countries signed a memorandum of understanding here under which a Japanese consortium would help build a terminal in Vladivostok for LNG piped from eastern Siberia and Sakhalin island for export to Japan.
Russia also hopes to export LNG to other countries in East Asia and is expected to outline specifics of the investment by the end of the year.
Trade and industry minister Yukio Edano and Russian energy minister Alexander Novak signed the memorandum here June 24 on the 1-trillion-yen ($12.4 billion) project.
The facility will start operating as early as 2018, with an annual output of 5 million tons rising to 10 million tons at some point.
Japan is eager to grab the lion's share of the LNG.
Gazprom, a Russian government-affiliated gas company, and a consortium comprising trading house giants Itochu Corp. and Marubeni Corp., and other companies, have carried out a feasibility study.
The Japanese side hopes to construct and operate the facility.
With annual purchases of 80 millions tons, Japan is the world's largest importer of LNG.
Demand for LNG has soared since the nuclear disaster in Fukushima Prefecture in March last year, forcing Japan to rely more on thermal power plants.
Japan has been eager to diversify its supplies of LNG, and at reduced rates.
With its sights set on the fast-growing East Asia region, Russia sees the LNG terminal as a base to expand its energy exports.
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