UPDATE 1-Gazprom considers gas pipeline to Japan

Thu May 3, 2012 12:45pm EDT

* Russia already sells LNG in tankers to Japan

* Talks with China fall through

By Vladimir Soldatkin

MOSCOW, May 3 (Reuters) - Russia's top natural gas producer Gazprom said on Thursday it was considering deliveries of gas to Japan via pipeline, and raised the prospect in a meeting with a Japanese parliamentary delegation in Moscow.

"The sides touched upon a possibility of working on a project for pipeline gas supplies from Russia to Japan," Gazprom said in a statement.

Sakhalin-2, Gazprom's far east consortium with Shell , Japan's Mitsui and Mitsubishi Corp, has already been shipping liquefied natural gas to Japan and Russia has considered ways to increase fuels sales to its neighbour, where demand for non-nuclear energy increased in the wake of Fukushima disaster last year.

Japan's northern island of Hokkaido is just over 40 km from Sakhalin or a one to two-day trip by LNG tanker, making Russia best suited to export gas to Japan, the world's largest LNG importer.

Gazprom has been also involved in painstaking and protracted talks with ExxonMobil about gas sales from Sakhalin-1 project, with the Russian company insisting the gas from the project is needed to satisfy domestic needs first.

Industry sources said that one of the possible ways of selling the gas from Sakhalin-1 is building an underwater pipeline to Japan - an option, complicated by danger of earthquakes along the numerous faultlines.

Russia has also been in talks about building a gas pipeline to China, but the deal has failed to materialise due to wide differences over pricing terms.

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