Decision on gas pipeline from Sakhalin to Japan expected by March 2015

Japan Pipeline Development & Operation (JPDO) plans to make the final investment decision on the construction of a gas pipeline that would connect Russia's Sakhalin Island with the Japanese island of Hokkaido by March 2015, the company's president, Hideo Ogawa said.

Japan Pipeline Development & Operation (JPDO) plans to make the final investment decision on the construction of a gas pipeline that would connect Russia's Sakhalin Island with the Japanese island of Hokkaido by March 2015, the company's president, Hideo Ogawa said.

He said the company hopes to make the final decision in the 2014 financial year (ending in March 2015), and complete surveys and preparations for construction in the same timeframe. Construction itself would take place from the 2015 through 2019 financial years, Ogawa said, adding that nothing actually stands in the way of the project.

The cost of the project is estimated at about JPY600 billion ($5.87 billion). The underwater pipeline would have capacity to carry 20 billion cubic meters of gas annually.

There have been attempts in the past to link Russia and Japan with a gas pipeline, but they have all failed, largely due to a lack of political will on the part of Japan. However, after the Fukushima nuclear power plant disaster in 2011 the cost of fuel for power plants in the country shot up and two major power companies were recently forced to ask for state aid.

The price of liquefied natural gas (LNG) shipped to Japan has averaged $15-$20 per million BTU since 2011. Last winter the price of LNG broke through the threshold of $20 per million BTU. The price of Russian piped gas could be $10-$13 per million BTU, Ogawa said.

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