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. Last Updated: 07/27/2016

Japan Firm Inks 15-Year LNG Deal

Chubu Electric Power, Japan's third-largest power producer, completed an agreement to buy liquefied natural gas from the Gazprom-led Sakhalin-2 venture for 15 years, the Japanese company said in a statement Friday.

Chubu Electric will buy about 500,000 tons of LNG starting April 2011, the company said in a statement. The utility said in July 2006 that it was in negotiations with Sakhalin Energy to buy the fuel.

Japan, the world's biggest market for LNG, is competing with the United States 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 paid $7.45 billion to Shell, Mitsui and Mitsubishi to acquire 50 percent plus one share of the Sakhalin-2 project, following months of threats by the Federal Service for the Inspection of Natural Resources Use last year to halt its development.

LNG is natural gas that has been chilled to liquid form, reducing it to 1/600th of its original volume at minus 161 degrees Celsius, for transportation by ship to destinations not connected by pipeline. On arrival, it is turned back into gas for distribution to power plants, factories and households.