Noda Signs Preliminary Deal With Putin on Vladivostok LNG Plant

Japan and Russia reached a preliminary deal on building a liquefied natural gas plant in Vladivostok as fuel demand rises in Asia.

Japan’s Prime Minister Yoshihiko Noda and Russian President Vladimir Putin signed an agreement today at the Asia-Pacific Economic Cooperation Summit that lays the framework for a decision this year. Most of the LNG produced at the plant is expected to be exported to Japan, according to Japan’s trade ministry.

Japan is seeking more LNG to fuel power stations after the 2011 Fukushima disaster triggered nuclear-reactor shutdowns across the country. A group led by Itochu Corp. (8001) agreed with Russia’s OAO Gazprom (GAZP) in April last year to study building an LNG plant in Vladivostok, a coastal city in Russia’s Far East.

The facility is expected to have a capacity of 10 million metric tons a year, according to Itochu. For Moscow-based Gazprom, Russia’s monopoly gas exporter, the project would provide increased access to Asian customers at a time when debt- laden European countries are cutting back purchases.

Gazprom plans to start production in Vladivostok in 2016 or 2017, Chief Executive Officer Alexey Miller said in June. The company may increase the capacity of the proposed plant to 25 million tons a year, the Nikkei reported Sept. 5, citing Deputy CEO Alexander Medvedev.

The gas producer, which had previously discussed the possibility of supplying gas to Japan by pipeline, has now scrapped those plans, the Associated Press reported June 29, citing Miller.

Itochu and its oil exploration unit together own 37.5 percent of Japan Far East Gas Co., a venture with Japanese partners.

To contact the reporters on this story: Toru Fujioka in Vladivostok at tfujioka1@bloomberg.net; Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.