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St Petersburg Times, Russia: Gazprom in Japan’s Pipeline

TOKYO — Gazprom may invest in a 300 billion yen ($2.6 billion), 850-kilometer pipeline to transport natural gas from Sakhalin Island to northern Japan, the head of the Japanese project said.

Japan Pipeline Development Organization, based in the northern island of Hokkaido, is in talks with Gazprom, Russia’s natural gas monopoly, Chief Executive Hideo Ogawa said. The pipeline may link to Exxon Mobil’s Sakhalin-1 project or Royal Dutch Shell’s Sakhalin-2 venture, he said.

“We’re seeking Japanese investors for about half the funding,” he said. “For the other half we’re talking with Gazprom and several other U.S. and European companies.”

The proposal may revive a plan to market gas from Sakhalin in Japan, which stalled because of a lack of support from Japanese utilities around Tokyo, the biggest market. Japan Pipeline’s new project would tap demand in northern Japan.

Japan Pipeline initially will spend 70 billion yen building a 360-kilometer pipeline between the Russian port of Korsakov and the Hokkaido town of Wakkanai by 2011. The pipeline will extend to Aomori, on the northern tip of Japan’s main island of Honshu, by 2013. The company may also build a power plant with General Electric as part of the project, Ogawa said.

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