Russian gas giant Gazprom held discussions Wednesday with Japan's Ministry of Economy, Trade and Industry (METI) on expansion of energy cooperation, with joint design and construction of a nationwide gas grid for Japan among the issues on the agenda, Gazprom said in a statement.
The Gazprom delegation headed by the company's chairman Alexei Miller met with METI minister Toshimitsu Motegi and with Ichiro Takahara, director general of the METI Agency for Natural Resources and Energy, the statement said.
"At the meetings [the parties] considered the possibility of cooperation in Japan's power generation segment as well as [joint] design and construction of a nationwide gas pipeline system to raise energy security of the country," the statement said.
Potential expansion of Russian LNG exports to Japan following the launch of the Vladivostok LNG plant in Russia's Far East in 2018 remained high on the agenda, it added.
In February, Gazprom's board approved a final investment decision for the Vladivostok LNG plant. The approved document will be the basis for developing the design documentation.
Gazprom expects the capacity of the Vladivostok LNG plant to reach up to 25 million mt/year.
The company sees Russia's Far Eastern Sakhalin, Yakutsk and Irkutsk gas centers as the key resource base for LNG production at Vladivostok.
Japan is the world's largest LNG buyer, importing a record 87.3 million mt of LNG in 2012, up 11% year-on-year, according to Japan's Ministry of Finance.
The country's LNG imports soared following the March 2011 earthquake, Fukushima nuclear disaster and subsequent nuclear outages in the country. JAPAN'S GAS GRID
The discussions over Gazprom's potential participation in expansion of Japan's gas pipeline system come after METI considered last year building large-scale gas storage and pipeline networks to enhance the country's energy security.
To maximize Japan's gas supply capacity, METI considered linking the pipeline systems to possible underground gas storage, using depleted gas fields as one option.
At the time, METI, however, recognized a number of obstacles to building widespread gas delivery and storage networks.
One issue was who would pay for building the pipelines, which are expected to require "massive investments" for possibly low returns if the pipelines are built in regions that may not have steady demand for gas.
Another was who would pay for re-gasification facilities to supply the pipeline and storage systems.
Currently, local gas and power utilities normally build their own import and supply facilities in Japan, with most of the major pipelines in eastern, central and western Japan not hooked up to each other. There have been plans laid to connect parts of the existing lines but these projects are still limited in the country.
The need for a more interconnected, integrated gas delivery system was highlighted by the supply disruptions to over 400,000 city gas customers for 16 regional city gas utilities from northeast to eastern Japan after the March 2011 earthquake, according to the Japan Gas Association.
