Japan ready to begin dialogue with India on Sakhalin gas swap

Japan ready to begin dialogue with India on Sakhalin gas swap
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First Published: Sun, Feb 10 2008. 11 25 PM IST

Energy security: An oil rig meant to be deployed at the Sakhalin field under construction at a South Korean shipyard.
Energy security: An oil rig meant to be deployed at the Sakhalin field under construction at a South Korean shipyard.
Updated: Sun, Feb 10 2008. 11 25 PM IST
India’s quest for gas for its fuel-starved economy may get a boost with Japan likely to agree to swap gas that it sources from West Asia with the supplies obtained by India off the Russian coastline.
If the deal does come through, it will also substantially reduce transportation costs and then the landed price of gas to both countries.
Japan Oil, Gas and Metals National Corp., or Jogmec, has agreed to explore possibilities with ONGC Videsh Ltd, or OVL, the overseas arm of Oil and Natural Gas Corp. Ltd, for swapping or selling gas from its blocks in Sakhalin-I, an important chapter in India’s quest towards energy security.
Exxon Neftegas Ltd is the operator for the multinational Sakhalin-1 consortium with ExxonMobil Corp. having a 30% stake in the consortium.
Energy security: An oil rig meant to be deployed at the Sakhalin field under construction at a South Korean shipyard.
The other partners include Sodeco of Japan with 30% stake, RN-Astra of Russia with a 8.5% stake, Sakhalinmorneftegas-Shelf of Russia with 11.5% stake and OVL with a 20% holding.
In return for its $1.7 billion investment (Rs6,732 crore) in the Sakhalin-I project, OVL is expecting 2-4 million tonnes of crude oil annually and 5-8 million cu. m of gas per day.
While the company sells crude oil in the international market, bringing gas to India has been a conundrum that it is trying to resolve. “If Exxon Mobil has plans to export gas as liquefied natural gas (LNG), of course Japan will be interested in that gas. We have already answered to ONGC that we are ready to discuss the proposal. Jogmec is now working on the dates for this discussion. We would first like to listen to ONGC’s idea. We have a need for LNG,” said Hiraku Tomofumi, director general at natural resources and energy policy, ministry of economy, trade and industry of Japan. Jogmec’s role is to secure a stable supply of oil and natural gas, non-ferrous metal and mineral resources for Japan.
“We have been trying to impress upon them the same. This is in line with India’s earlier efforts to reduce costs for transporting the LNG,” said a senior Indian government official who did not wish to be identified.
The proposal, was first reported by Mint on 4 May.
It is estimated that India needs around 180 million standard cu. m per day (mscmd) of gas particularly for sectors such as power generation and fertilizer, but current supplies are around 81mscmd.
“This has been an accepted practise in crude oil. I do not see any reason why it should not work for gas. It is perfectly doable and is a win-win situation for both India and Japan,” said Ajit Kapadia, vice-chairman of the Centre for Fuel Studies and Research, a Vadodara-based think tank.
In a related development, OVL and Jogmec may also partner in bidding for oil and gas assets overseas.
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First Published: Sun, Feb 10 2008. 11 25 PM IST
More Topics: Japan | Sakhalin | Oil | ONGC | OVL |