Russia is expanding gas exports to the Asian Pacific region. This year it is to supply 16 extra batches of liquefied natural gas (LNG) to Japan as part of the Sakhalin 2 project.

The enterprise on the Sakhalin Island project is capable of producing 10 million tons of LNG a year, which is about 5% of the LNG global production. The Sakhalin project will help Russia enter the LNG global exporters club.

With the growing demand for gas in Asia it is necessary to expand the LNG production facility on Sakhalin Island by building its third stage, the governor of the Sakhalin region Alexander Khoroshavin said. The additional amount of gas, which is 5 million tons, will be demand, President of the Russian Union of Oil and Gas Industry Workers Gennady Shmal says:

"We can find many customers first of all in Japan, especially considering the recent events at the Fukushima NPP. Currently, Japan is one of the main importers of LNG accounting for more than 1/3 of all LNG trade.

Now Japan is buying LNG in Qatar, Indonesia, Malaysia and Australia. But the third stage of the Sakhalin facility which is located near Japan will definitely be in demand. Japan will "swallow "these extra 5 million tons and it won't be even enough. Korea is next on the list of potential importers, and China is also down the line."

According to forecasts, the Asian Pacific region's demand for LNG will increase twofold by 2020. Russia's oil and gas giant Gazprom is taking this into account in developing its eastwards export gas policy.

By increasing gas sales to the neighboring countries, Gazprom will be able to cut transit risks and enter new markets it could not enter with its pipeline supplies, Sergey Agibalov, an expert at the Institute of Energy and Finances fund says:

"In Europe, Russia is facing certain difficulties because pipeline supplies are attached to the oil products supplies and spot trading is developing. The competition is tougher there.

Asia, especially Japan and Korea, is a slightly different market and the prices there differ from those in America and Europe. Gazprom is free to choose on which terms it can enter these markets."

Thanks to its acceptable price and low production costs Russian gas is quite competitive in comparison with fuel produced in other countries, Shmal says:

"If we compare the costs for the construction of the plant on Sakhalin with the costs for the construction of similar plants in Australia and Malaysia it is twice as high in those countries. Financially, the Russian plant has proved to be less expensive."

As for the raw materials base for the third stage of the LNG plant on Sakhalin, it is, first of all, the Kirinskoye gas deposit on the Sakhalin shelf. It was discovered 20 years ago and still has enormous gas reserves. Soon a unique underwater gas production facility will be put into operation there.

Source: Voice of Russia