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. Last Updated: 07/27/2016

Tokyo Gas Signs Final Deal With Sakhalin-2

Sakhalin Energy, a Royal Dutch/Shell Group venture, said it signed a final agreement to sell liquefied natural gas from its Sakhalin project off the Pacific coast to Tokyo Gas Co., Japan's biggest natural gas distributor.

Sakhalin Energy said the agreement sets full terms and conditions for the gas purchase. Tokyo Gas will buy 1.1 million tons of LNG per year for 24 years, the venture said in a statement today. It didn't specify the value of the contract.

The contract completes a deal first agreed to in May 2003 that was Sakhalin Energy's first preliminary LNG sales agreement. Sakhalin Energy will supply the fuel from an LNG plant it's building on Sakhalin island. The plant, Russia's first, will have a capacity of 9.6 million tons of LNG per year. The venture has contracts to sell at least 5.4 million tons of LNG per year to Asian and North American customers. On Wednesday, Sakhalin Energy signed a 20-year contract with Kogas to deliver 30 million tons of LNG to South Korea, the company said.

The Sakhalin-2 project, whose partners include Japan's Mitsui & Co. and Mitsubishi Corp. and Royal Dutch/Shell, has reserves of some 150 million tons of oil and 500 billion cubic meters of gas.

(Bloomberg, AP)