First major LNG contract for Sakhalin

In what represents the first major contract for the project, Tokyo Gas Co has decided to purchase up to 1 million tonnes of liquefied natural gas a year, starting in 2007, from a field being developed on Sakhalin in Russia's Far East.

The field, dubbed Sakhalin-2, is estimated to contain the LNG equivalent of more than 300 million tons and is being developed by Royal Dutch/Shell together with trading house giants Mitsui & Co and Mitsubishi.

The field is expected to produce an annual 9.6 million tons. Analysts say this deal will help Japan diversify its sources of energy imports for stable procurement. Japan now relies heavily on the Middle East and Southeast Asia.

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