Japanese companies willing to invest $5 bln in construction of Sakhalin-Hokkaido gas pipeline

Japanese companies are willing to invest $5 billion in the construction of a 1,400-kilometer gas pipeline running directly from Sakhalin to Ibaraki Prefecture (not far from Tokyo), Sakhalin-based media outlets reported, citing the November 4 edition of Japanese newspaper Asahi.

According to the publication, gas company Tokyo Gas, oil company Japan Petroleum Exploration (JAPEX) and construction company Nippon Steel & Sumikin Engineering are working through the details of the project. It will take between five and seven years to implement it, according to the companies' preliminary estimates.

The Japanese companies are prepared to invest up to 400 million yen, or $5 billion, in the construction of the gas pipeline, the newspaper reported. "This is the first serious intensification by Japanese companies in this direction in the last ten years," it said.

Russian gas major Gazprom previously said that it had been in talks with Japan on possibly building a gas pipeline on the Honshu and Hokkaido islands. However, according to Gazprom, the parties agreed that the main priority is a liquefied natural gas (LNG) plant. Gazprom might revisit the construction of a pipeline after it implements its LNG projects.

As reported, the project involves laying a gas pipeline from Prigorodnoye Port in southern Sakhalin to the island of Hokkaido (the northernmost Japanese island and the closest to Sakhalin), then later on to the south along Japan's eastern coast through the Aomori, Iwate, Miyagi and Fukushima Prefectures.

The pipeline's planned capacity is about 16-20 billion cubic meters (bcm) of gas. Japanese estimates put the project's price tag at 550-700 billion yen. Japanese companies think that gas from the Sakhalin-3 project and surrounding fields could serve as the resource base for the pipeline. In Aomori, the pipeline will be joined up to the existing Aomori - Tokyo district system.

Japan is the largest LNG importer in the world. After the Fukushima disaster in March 2011 and the powering down of the majority of the country's nuclear reactors, Japan's demand for hydrocarbon fuel soared.

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