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Japan, Russia agree to boost energy relations, trade

Japan and Russia pledged to strengthen reciprocal relations in oil and natural gas development and boost trade at a ministerial meeting in Tokyo.

Russian energy minister Viktor Khristenko and Japanese foreign minister Taro Aso discussed two oil and gas projects in Russia's Sakhalin island and an East Siberian oil pipeline project, a Japanese foreign ministry official said, speaking on condition of anonymity. The two ministers met for two hours. Japan, which imports 89% of its oil from the Middle East, is increasing its reliance on Russian energy assets such as oil, gas, and uranium enrichment process to strengthen its supply security.
That contrasts with Europe, Russia's largest energy market, where nations has discussed cutting reliance on Russian oil and gas after a series supply disruptions. „Japan should expand oil and gas imports from Russia,” Hidetoshi Shioda, senior energy analyst at Mizuho Securities Co. in Tokyo said by telephone. „Cutting dependence on Middle East means mitigating risks of any supply disruption in the region in the years ahead.” In the talks, Khristenko called Japan a vital market for Russia's oil and gas exports, the official said.
The two ministers agreed that their countries should be able to expand trade in areas including energy, fishery and agricultural products, transportation and information technology. Khristenko told Aso that Russia has completed a 700-kilometer section of its proposed 4,300-kilometer oil pipeline from Taishet in eastern Siberia to Perevoznaya on Russia's Pacific coast, the official said.

In the first phase of the project, Russia will build a pipeline to Skovorodino by the end of 2008 and construct an extension line to Perevoznaya in the second phase. Japan has lobbied for the construction of the pipeline to Perevoznaya to boost imports of crude oil produced in eastern Siberian fields. Aso told Khristenko that Japan is keen to import liquefied natural gas from the Exxon Mobil Corp.-led Sakhalin-1 project, which started oil exports from Russia's DeKastri terminal last year, the official said.
Tokyo Electric Power Co. and other Japanese LNG buyers have lobbied Exxon Mobil to link up with the Royal Dutch Shell Plc.-led Sakhalin-2 project. The Japanese utilities have asked Exxon to call off a plan to pipe gas from Sakhalin island to Japan or China, and instead turn the fuel into LNG. In December, Royal Dutch Shell Plc. and its two Japanese partners agreed to sell Russia's state-run OAO Gazprom half their stakes in the Sakhalin-2 venture, which includes Russia's first LNG export terminal.
Tokyo Electric, Tokyo Gas Co. and other utilities have signed supply contracts from Sakhalin-2 to start importing about 5 million metric tons a year of LNG in the next few years. Russian Premier Mikhail Fradkov is due visit Tokyo to hold to discuss economic and trade relations with Aso and Prime Minister Shinzo Abe later this week. (Bloomberg)