Japan, Russia back huge LNG project

Japan and Russia will throw their weight behind a private-sector project to build a liquefied natural gas (LNG) plant in Russia's Far East, it emerged in the margins of an Asia-Pacific Economic Cooperation forum in St. Petersburg

The agreement concerns a plant in Vladivostok that is expected to produce 10 million tonnes of LNG annually -- or about 13 per cent of Japan's annual imports -- from later this decade, said an official.

"As it is important for Japan to diversify its energy supply sources, the government has constantly backed the project," he added.

"Under the memorandum, both governments will provide 'necessary support' to the project, which means the governments will encourage those companies to proceed with the project”.

A Japanese consortium led by trading house Itochu is expected to build the plant with Russia's state-run gas firm Gazprom, with a reported price tag of about 1.0 trillion yen (USD 12.45 billion).

The facility will receive natural gas from other parts of Russia and convert it to LNG before shipping it to countries in the Asia-Pacific.

Resource-poor Japan and South Korea are the world's top LNG importers, accounting for nearly half of all shipments.

Japan's annual imports of the gas are expected to rise to 90 million tonnes this year after the nation switched off its nuclear reactors in the wake of the 2011 atomic crisis at the Fukushima Daiichi plant.

Nuclear power has traditionally supplied about one-third of Japan's energy needs.