Itochu Oil Exploration Co., Ltd. (“CIECO”) and ITOCHU Corporation founded a joint research company, Japan Far East Gas Co., Ltd. (“JFG”) together with JAPEX, Marubeni and INPEX on December 6, 2010. In the year 2011 and 2012, the company carried out joint feasibility study (FS) with state-owned Russian gas company, OJSC Gazprom (“Gazprom”) for natural gas utilization project in the Vladivostok area, as well as transportation and sale of natural gas and gas-chemical products from Vladivostok area to potential buyers in countries in Asia-pacific region (Vladivostok LNG Project).
Based on the results of this FS, on June 24, 2012, Ministry of Economy, Trade and Industry of Japan (“METI”) and Energy Ministry of the Russian Federation signed on a Memorandum of Understanding (“MOU”)for cooperation in Vladivostok LNG Project.
On September 8, 2012, METI and Gazprom signed another MOU for further mutual cooperation in promotion of the Vladivostok LNG Project. On February 21, 2013, Gazprom made the decision of investment on Vladivostok LNG Project.
Based on series of these of events, on June 22, 2013 in St. Petersburg, Russia, JFG and Gazprom has signed a MOU for the natural gas liquefaction project in Vladivostok. In this MOU, JFG and Gazprom reached a basic agreement to have further discussions on foundation of a joint project company as well as joint marketing activity in Japan.
The Vladivostok LNG project has been planned to develop annual production capacity of 10MTPA with expansion plan up to 15MTPA. Feed gas will be supplied from the abundant gas resources in Sakhalin and Eastern Siberian area. Realization of this project will contribute to the stable LNG supply not only to Japan but also to the other Asian countries and to the diversification of Russia’s gas (LNG) export sources.
CIECO holds 5% stake in JFG. Together with Itochu’s 32.5% stake, Itochu group has 37.5% share in total which makes it the largest shareholder.