Russia and Japan are in very aggressive talks on expanding the gas trade agreements between the two countries ahead of Japan Prime Minister Shinzo Abe’s visit to Moscow later this month. With Japan keen to find low-cost energy sources in the wake of the mothballing of most of the country’s nuclear power plants, Russia is eager to fill in the gap with its huge natural gas exports – and a breakthrough deal might just be in the pipeline.
The deal, touted as big enough to hugely impact the East Asia energy map, could be formalized on Abe’s April 29 meeting with Russian President Vladimir Putin. The deal, if formalized, could be a big blow to other liquefied natural gas (LNG) suppliers such as Australia, Qatar and Malaysia – from where Japan, the world’s top importer of LNG, is getting its current supply. Japan is currently trying to adjust to the huge expenditures on fossil fuels brought about by the nuclear plant blackout after the Fukushima nuclear disaster, and is on the lookout for cheaper prices on LNG. Russia’s biggest gas exporter, Gazprom, will soon face a threat from the development of cheap North American shale gas exports, and so a deal with Japan will come as a boon to the company as it looks to lock down customers. Aside from Japan, Gazprom also wants to send East Siberian gas to China, locking down another potentially huge profit – if it can ever agree on pricing with the Chinese.
“The talks have picked up steam dramatically,” a senior Russian government official said. “I think the rules of the game are about to change big time. Gazprom, which until now has had the monopoly and has been elusive, is getting a move on.” But the Japanese trade ministry officials are downplaying expectations, as they have been in this position before, only for deals to be derailed by a long-standing territorial dispute over a North Pacific island chain.
[via Business Times]
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