(Repeat of earlier story with no change in text)
* Japan's own diplomatic drive to secure more Russian gas
* Asian LNG buyers such as Japan currently pay Asia premium
* China-Russia deal may see positive spinoffs by containing
* Japanese buyers hold off term LNG contracts on nuclear
By Osamu Tsukimori and James Topham
TOKYO, June 8 For once, China looks to have done
Japan a favour.
In clinching a $400 billion deal last month to buy Russian
gas, China may end up helping out its old political and economic
rival in a way that matters hugely for Japan - energy security.
The China-Russia agreement, the biggest gas deal ever,
unlocks new gas supplies and could bring down gas prices across
Asia, a development that would pay the biggest dividends for
Japan, the world's top buyer of liquefied natural gas.
Other big Asian gas buyers such as South Korea and Taiwan
could also benefit.
The deal, signed on May 21, cemented a dramatic shift in
energy flows from the West to the East. Gas will be transported
to China via a new pipeline linking Siberian gas fields from
2018, building up gradually to 38 billion cubic metres a year.
China has massive gas needs, but access to more of the fuel
is also vital for Japan since its utilities pay the world's
highest prices. Japan buys about a third of global LNG shipments
and spent a record 7.06 trillion yen ($70 billion) last year,
mostly for electricity generation to replace idled nuclear
reactors following the Fukushima disaster in 2011.
There are hopes that piping Russian gas to China will create
a new price benchmark that could cut prices for Asian LNG buyers
as well as providing new gas sources.
"This will surely put downward pressure on gas prices and
some say it is the beginning of the end of the Asia premium,"
Masumi Kimura, a researcher at Japan Oil, Gas and Metals
National Corp (JOGMEC), said in a note, referring to the higher
price paid for gas in Asia compared to other parts of the world.
Russia's Gazprom declined to confirm what price
the deal with China was struck, but industry sources say it
translates to about $10-$10.50 per million British thermal
units, an international pricing standard, well below the current
level of around $13 for spot Asian cargoes LNG-AS.
A source at one of the biggest Japanese buyers of gas
shipped in liquid form said that the new Russian gas should
absorb some Chinese pressure on LNG demand in Asia.
Others were cautious, however, over the potential impact.
"The Russian gas will be coming into the northeast of China,
into a market that was never going to be served by LNG in the
first place," said Gavin Thompson, head of Asia-Pacific gas and
power at consultancy Wood Mackenzie.
Takashi Hayasaki, general manager of the Japan Petroleum
Development Association, said the China-Russia pipeline would
"also spur further development of gas fields in Siberia that
could be a source of LNG for Japan.".
Japan's Russian purchases have grown with oil and gas
flowing from Sakhalin island to the north of Japan since 2009
and oil via the East Siberian Pacific Ocean extension from 2012.
Imports of Russian LNG rose 3.1 percent last year to 8.57
million tonnes, or 9.8 percent of total imports. The ratio is up
from 4.3 percent in 2009 when Japan started Russian gas imports.
Prime Minister Shinzo Abe met Russian President Vladimir
Putin five times in the last 18 months, more than any other
leader. Amid a flurry of agreements there was talk that closer
energy ties could come with the resolution of an island dispute
dating from the end of World War II.
But the diplomatic efforts to take a bigger role in gas
projects appear to have fizzled out since the Ukraine crisis,
which has led to sanctions on Moscow that Tokyo has supported.
Gazprom and Royal Dutch Shell operate
Russia's only LNG plant on Sakhalin, with Japan's Mitsuibishi
Corp and Mitsui & Co as junior partners.
HOLDING OFF LONG-TERM CONTRACTS
The Chinese deal has also revived talk of a pipeline from
Russia to Japan. A group of 33 ruling party lawmakers plans to
lobby Abe to sign a deal on a gas link with Putin at an
estimated cost to build of about $6 billion compared with more
than $40 billion for the Chinese pipeline.
But Daiske Harada, an economist with JOGMEC focusing on
Russia, said Rosneft and Gazprom were more interested in pushing
exports by LNG to the Pacific market, not by pipeline.
Gazpom plans to build a second plant in Vladivostok by 2018,
with a capacity of 10 and 15 million tonnes of LNG per year, and
also a spur to the Chinese pipeline to bring gas to Vladivostok.
Rosneft and ExxonMobil also plan an LNG
plant on Sakhalin to produce 5 million tonnes a year from 2018.
Along with Russian supplies, Japan could also benefit with
the United States due to start shipping shale gas from as early
as 2015. Other potential sources include West Africa and Canada.
And faced with potential new supplies, Japanese buyers are
holding off from signing long-term LNG contracts starting from
around 2017 until there is more clarity on nuclear power, said a
source in the natural gas division of a Japanese trading firm.
(Additional reporting and writing by Aaron Sheldrick in TOKYO
and Jacob Gronholt-Pedersen in SINGAPORE; Editing by Ed Davies)