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Bloomberg: Gazprom Tells Tokyo Gas 2008 LNG Exports May Be Late (Update2)

By Shigeru Sato

Dec. 19 (Bloomberg) — Tokyo Gas Co., Japan’s largest distributor of the fuel, was notified Russia may miss a target to start exporting liquefied natural gas by the end of next year.

The Japanese gas utility has received notice from OAO Gazprom’s Sakhalin-2 LNG project operator that it aims to complete construction work on the plant by the end of calendar 2008, spokesman Naoyoshi Oogake said today in Tokyo by telephone. Shipments may start some time in early 2009, Oogake said.

Sakhalin Energy previously planned to start exporting LNG in the third quarter of 2008 to customers including Tokyo Gas, which has signed a 24-year contract for a maximum of 1 million metric tons of the fuel a year. Tokyo Gas and Sakhalin Energy will hold talks on how to deal with the possible delays, Oogake said.

“We’re expecting a relatively minor impact from Sakhalin- 2’s shipment delay to our gas supply because we’ve already diversified supply sources,” Oogake said. “The contract with Sakhalin-2 also allows us to take a much smaller volume than 1 million tons in the initial period of the deal.”

Russia’s state-run Gazprom bought a 50 percent plus one share holding in Sakhalin Energy in April for $7.45 billion from foreign shareholders Royal Dutch Shell Plc, Mitsui & Co. and Mitsubishi Corp. The stakes held by the three foreign companies dropped to 27.5 percent, 12.5 percent and 10 percent, respectively.

Tokyo Gas may seek fuel from alternative suppliers such as Australia, Southeast Asia and the Middle East to cover an expected shortage, depending on the effect of the shipment delay from the Sakhalin-2 project.

Tokyo Gas buys 10 million tons of LNG a year, accounting for 17 percent of Japan’s imports of about 60 million tons. The company supplies fuel to 10 million customers in Tokyo and its seven surrounding prefectures.

To contact the reporter on this story: Shigeru Sato in Tokyo at [email protected] .

Last Updated: December 19, 2007 00:35 EST

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