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Forbes / AFX News Limited: Russian premier to visit Japan next week to discuss territorial row, Sakhalin-2

02.20.07, 1:01 AM ET

TOKYO (XFN-ASIA) – Russia’s prime minister and energy minister will visit Japan next week to discuss a territorial dispute and a row over Moscow’s takeover of the massive Sakhalin-2 oil and gas project, an official said.

Prime Minister Mikhail Fradkov will pay a two-day visit from Feb 27 and meet with his Japanese counterpart Shinzo Abe and will have an audience with Emperor Akihito and Empress Michiko, a Japanese foreign ministry official said.

‘We hope to have active discussions on an expansion of relations in the field of trade and economy between Japan and Russia,’ the official said. ‘The territorial issue should naturally be on the agenda.’

More than six decades after the end of World War II, Russia and Japan have yet to sign a peace treaty because of a dispute over four Pacific islands, which Russia calls the Southern Kurils and Japan calls the Northern Territories.

The standoff has stalled economic relations between Japan and Russia.

Russian Industry and Energy Minister Viktor Khristenko will also visit a day before Fradkov’s trip.

‘In the framework of wide-ranging discussions, the energy issue will be also discussed,’ the official said.

State-controlled Gazprom in late December bought a 50 pct-plus-one stake in the giant Sakhalin-2 oil and gas project in far eastern Russia.

The Sakhalin Energy consortium was run by Royal Dutch Shell (nyse: RDSA – news – people ) in a consortium with Japan’s Mitsui and Mitsubishi (other-otc: MSBHY.PK – news – people ) until December, when the companies ceded control to Russian gas monopoly Gazprom after months of pressure from environmental regulators.

The move was widely seen by foreign investors as a way for the Kremlin to muscle in and take control.

Japan is the primary market for the gas from Sakhalin-2 and has warned that overall relations would be hit if it does not ultimately receive gas.

Japan has virtually no energy reserves and is increasingly switching to natural gas for its needs. The country imports around 96 pct of the natural gas it consumes.


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