Sakhalin LNG to be exported mainly to Japan and South Korea

The principal amount of the LNG extracted under the Sakhalin-2 project will be exported to Japan and South Korea, rather than China, acting Sakhalin region Governor Ivan Malakhov has said.
"There are no hopes thus far that we could enter the Chinese market," Malakhov told. “There has been no reorientation regarding Sakhalin-2. Agreements with Tokyo Gas and Tokyo Electric have recently been confirmed," he said.

LNG supplies to Japan will begin starting 2007, and will be carried out over the next 22-25 years, he said.
"Everything is so far oriented to Japan," he noted. "Certain Japanese partners, such as Tokyo Electric, are talking about a possible increase in LNG supplies by 1 mm tons," Malakhov said. In addition, he said negotiations on LNG supplies are currently underway with South Korean companies.

The Sakhalin-2 project is being implemented on production sharing terms. Extractable reserves of the Piltun-Astokh and Lun fields are estimated at 185 mm tons of oil and 800 bn cm of gas.The production of oil under the project began in summer 1999. The project also envisions the construction of a facility to produce LNG with a capacity of 9.6 mm tpy. At the moment, contracts have been concluded with Japanese companies on supplying a total of 2.8 mm tpy of LNG over the next 20 years.
The project operator is Sakhalin Energy. Its shareholders are the British-Dutch company Shell (55 %) and Japan's Mitsui (25 %) and Mitsubishi (20 %).