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Bloomberg: Chubu Electric Completes 15-Year Accord to Buy Sakhalin LNG

By Megumi Yamanaka

Aug. 3 (Bloomberg) — Chubu Electric Power Co., Japan’s third-largest power producer, completed an agreement to buy liquefied natural gas from the OAO Gazprom-led Sakhalin-2 venture in Eastern Russia for 15 years.

Chubu Electric will buy about 500,000 metric tons of LNG starting April 2011, the Nagoya-based company said in a statement today. The utility said July last year it was in negotiations with Sakhalin Energy to buy the fuel.

Japan, the world’s biggest market for LNG, is competing with the U.S. and China for supplies as global demand for the cleaner- burning fuel surges. Chubu Electric, which has about 10 million customers in central Japan, is looking to gas projects in Russia to help make up for declining shipments from Indonesia, the world’s largest LNG exporter, and Australia.

Gazprom, Russia’s state-controlled gas company, paid $7.45 billion to Royal Dutch Shell Plc, Mitsui & Co. and Mitsubishi Corp. to acquire 50 percent plus one share of the Sakhalin-2 project, following months of threats by Russian environmental inspectors last year to halt its development.

LNG is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit), for transportation by ship to destinations not connected by pipeline. On arrival, it’s turned back into gas for distribution to power plants, factories and households.

To contact the reporters on this story: Megumi Yamanaka in Tokyo at [email protected] .
Last Updated: August 3, 2007 02:06 EDT

 

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